Interpersonal versus interbank lending networks: The role of intermediation in risk-sharing

Analyzing the interpersonal lending network of a Hungarian village in disadvantaged region, we find strong intermediary activity and tiered core-periphery structure. We show that main motive behind is not altruism or profit-seeking, but risk-sharing which most accentuated poor-to-poor Roma-to-Roma relations. Comparing this informal market to formal interbank market, more similarities than differences. In both markets, intermediation key element an effective tool cope with liquidity risk. Regulatory development policies should respect existing institutions risk-sharing.