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Does Interbank Borrowing Reduce Bank Risk?

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  • Dinger, Valeriya
  • von Hagen, Jürgen

Abstract

In this paper we investigate whether banks that borrow from other banks have lower risk levels. We concentrate on a large sample of Central and Eastern European banks which allows us to explore the impact of interbank lending when exposures are long-term and interbank borrowers are small banks. The results of the empirical analysis generally confirm the hypothesis that long-term interbank exposures result in lower risk of the borrowing banks.

Suggested Citation

  • Dinger, Valeriya & von Hagen, Jürgen, 2008. "Does Interbank Borrowing Reduce Bank Risk?," CEPR Discussion Papers 6635, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:6635
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    References listed on IDEAS

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    More about this item

    Keywords

    bank risk; interbank market; market discipline; transition countries;

    JEL classification:

    • E53 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Deposit Insurance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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