Call for Proposals
Network Liquidity Effects in the Global Interbank Market

The SWIFT Institute invites proposals for research on network liquidity effects in the global interbank market at both the individual entity level and from a network perspective.

In the wake of the financial crisis, financial stability and liquidity risk management are of increasing concern. Historically interbank markets were amongst the most liquid. Since the financial crisis, however, liquidity in the interbank market declined as banks became reluctant to lend.

First-generation network solvency-based theories, such as those of Eisenberg and Noe (Systemic Risk in Financial Systems, 2001), could be elaborated to allow dynamics, to consider liquidity and solvency in tandem, and to consider incentive effects such as those leading to cash hoarding during an intra-day liquidity event. Prior empirical analyses, such as the extensive work done using FedWire data, could be broadened to better understand past liquidity-related crises, particularly in an international context.

TOPICS: Research proposals on network liquidity effects can be theoretical or empirical. The focus of the research could look at the following (other suggestions are welcome)
- Algorithmic design to depict and optimise intra- and inter-market liquidity needs and surpluses and identify solvency issues
- Determining liquidity thresholds: When is it time to rename liquidity problem to insolvency problem?
- Impact of interest rate changes on liquidity and solvency conditions vs. implementation of quantitative easing or asset-purchase programs
- Role of financial market infrastructures: propagator or cushion of shocks?

GRANT & WORKING PAPER: A grant of EUR 15,000 will be awarded to the author of the selected proposal. 50% will be paid immediately; the remaining 50% will be paid on submission of a working paper following the research.

PAPER SUBMISSION PROCEDURE: Please submit your research proposal as follows:
1. CV/bio including education, work history, research experience, publications, etc.
2. Description of your research project (2,500 words maximum) to include the following:
- Objective of your research
- Methods by which you intend to undertake your research
- Timeframe by which you intend to complete your research
3. By email in MS Word/Excel/PowerPoint format, and/or pdf

Deadline: Proposals must be submitted no later than 24 September, 2012

Email: Send submissions to: Information.SWIFT.Institute@swift.com



Posted 9/17/12