Time: 13:00-15:00 (UK Time), Wednesday, 1 November 2023
Presenter: Dr. Anosi F. Ikimalo, Optimum Global Capital, Nigeria
Chair: Prof. Victor Murinde, SOAS University of London

Abstract
While theory suggests that lending relationships amongst banks in the interbank market network are determined by several factors, the empirical findings on the role of the critical factors are rather mixed and highly inconclusive. In this paper, a model is specified where a bank’s attractiveness as a trading counterparty is primarily influenced by its governance structure (in terms of ownership and CEO power) and competitive behaviour. The model is estimated using a random effects GLS method. To the best of our knowledge, this is the first study that empirically explores the role of a bank’s participation in the financial ecosystem and how this contributes to its relationship in the interbank market. Three new findings are uncovered. First, it is found that foreign ownership (in the context of pan-African banks and foreign transcontinental banks) and CEO power have a negative effect on a lender’s attractiveness. Second, the evidence suggests that banks, which are competitive in their core business of deposit taking and loan creation, are more attractive as borrowers. Third, further evidence shows that the attractiveness of borrowers is also positively influenced by the dynamics in the foreign exchange market; when the local currency depreciates, lenders are more likely to form relationships with borrowing counterparties. Overall, these new findings have importance implications for practice and policy (peer regulation) in the interbank market.

Keywords: interbank market; network analysis; core-periphery, banking groups, relationship banking.

JEL Classification: G10, G21

Presenter

Dr. Anosi Ikimalo is the Managing Director of Optimum Global Capital, a boutique investment bank headquartered in Lagos Nigeria. He previously worked at Investment One Financial Services (formerly GTB Asset Management), a leading investment bank in Nigeria. He received his PhD from SOAS University of London in 2022. His research focuses on the areas of interbank markets and capital market development and the role of the non-bank financial sector in financial stability.