Koeppl, Thorsten V.; MacGee, James C. - In: European Economic Review 53 (2009) 2, pp. 222-236
We show that interbank markets are a poor substitute for "broad" banks that operate across regions or sectors. In the presence of regional or sectoral asset and liquidity shocks, interbank markets can distribute liquidity efficiently, but fail to respond efficiently to asset shocks. Broad banks...