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This paper introduces a structural micro-founded dynamic stochastic network model for the unsecured interbank lending market. Banks are profit optimizing agents subject to random liquidity shocks and can engage in costly counterparty search to find suitable trading partners and peer monitoring to reduce counterparty risk uncertainty. The structural parameters are estimated by indirect inference using appropriate network statistics of the Dutch interbank market. The estimated model is shown todoi:10.2139/ssrn.2390828 fatcat:nwyurrwmbva3nhqiozixyyws2e