I Theme: The interbank Network across the Great Financial Crisis: Evidence from Italy

II Speaker: Alberto Franco Pozzolo, economics professor at University of Molise. His research achievements were published in famous international economics periodicals including Journal of Monetary Economics, Journal of International Economics, and Journal of Business etc. His current research subject is research on FDI and banks. He has been an economist in Research Department, Bank of Italian. He has also visited many universities around the world, including the University of Chicago (USA), Cass Business School (UK), and Beijing Normal University etc.

III Time: June 3, 2015 (Wednesday), 12:30-13:30

IV Venue: Meeting Room 913, Main Building

V Host: Huang Zhigang, Vice Professor from School of Finance, Central University of Finance and Economics

Abstract: We study the effects of the great financial crisis on interbank market connectivity using the tools of network analysis. More specifically, using data on each bilateral interbank position of all Italian banks between 1998 and 2013, we analyze the impact on banks network centrality of the following events: the liquidity crisis of August 2007, Lehmans default in September 2008, the Eurosystem's Long Term Refinancing Operations that took place between 2009 and 2012, the Sovereign debt crisis of July 2011, and the announcement of the Outright Money Transactions in 2012. The results show that the 2007 liquidity crisis and especially the default of Lehman Brothers caused a strong reduction of the interconnectedness within the Italian banking sector, but that in the following years the system progressively recovered the initial level of integration, thanks also to the Eurosystem's monetary policy interventions. However, the average effect hides different impacts across banks, depending on their characteristics and initial positions within the system.