The interbank market during a crisis

Craig Furfine*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

22 Scopus citations


The autumn of 1998 provides a setting in which to test the performance of the interbank market during a potential financial crisis. This period witnessed Russia's effective default on its sovereign bonds and the near collapse of the hedge fund Long-Term Capital Management. Despite these negative shocks to bank capital and increased uncertainty in financial markets, the federal funds market still effectively channeled liquidity to those institutions in need at rates consistent with Federal Reserve intentions. Further, risk premiums on overnight lending were largely unaffected and lending volumes increased, suggesting that the federal funds market performed well during this period.

Original languageEnglish (US)
Pages (from-to)809-820
Number of pages12
JournalEuropean Economic Review
Issue number4-5
StatePublished - 2002


  • Federal funds
  • Financial crisis
  • Interbank market

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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