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It also sketches how the corresponding model of bank behavior can be ex- tended to allow for interbank borrowing and lending along with market-clearing in the interbank loan market.
Section 5 provides a straightforward extension of the above model to consider interbank borrowing and lending along with clearing in the interbank loan market.
We now sketch how the above model can be extended to consider interbank borrowing, lending, and clearing in this market.
Our analysis now examines interbank borrowing, lending, and market-clearing.
To link the demand for wholesale loans with interbank borrowing, we permit Fi to take on either negative or positive values for i = B, S, G.
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