Financial Institutions Face Short-Term Liquidity Contagion Risk in Interbank Market
The study looked at how a financial institution's default can affect other banks' short-term cash flow in Colombia. They used a method called DebtRank to see which banks were most at risk. The results showed that only a few banks would be seriously affected by a default, but this would only happen in rare, extreme situations. Overall, the impact on the whole banking system is still uncertain because the interbank market is not the main player in the local money market.