We show that partial versus full multilateral netting of interbank liabilities increases bank shortfall and reduces clearing asset price and aggregate bank surplus. We also show that partial multilateral netting can be worse than no netting at all.
Hamed Amini, Damir Filipović, Andreea Minca (2015) To Fully Net or Not to Net: Adverse Effects of Partial Multilateral Netting. Operations Research 64(5):1135-1142.
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