01674cas a2200241 a 4500 AALejournalIMF017056 230101c9999 xx r poo 0 0eng d 5.00 USD 9781475530292 1018-5941 BD-DhAAL BD-DhAAL Deb, Pragyan. Market Frictions, Interbank Linkages and Excessive Interconnections / Pragyan Deb. Washington, D.C. : International Monetary Fund, 2016. 1 online resource (41 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper studies banks' decision to form financial interconnections using a model of financial contagion that explicitly takes into account the crisis state of the world. This allows us to model the network formation decision as optimising behaviour of competitive banks, where they balance the benefits of forming interbank linkages against the cost of contagion. We use this framework to study various market frictions that can result in excessive interconnectedness that was seen during the crisis. In this paper, we focus on two channels that arise from regulatory intervention-deposit insurance and the too big to fail problem. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2016/180 Full text available on IMF http://elibrary.imf.org/view/journals/001/2016/180/001.2016.issue-180-en.xml IMF e-Library