Does Interbank Borrowing Reduce Bank Risk?

Dinger, Valeriya and Hagen, Jürgen von (November 2007): Does Interbank Borrowing Reduce Bank Risk? SFB/TR 15 Discussion Paper No. 223

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.

• Item Type: Paper (Discussion Paper)
• Keywords: interbank market, bank risk, market discipline, transition countries
• Collections: Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems; Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems > A5 - Unvollständige Vertragsbeziehungen und die Gestaltung von Residualrechten
• Subjects: 300 Social sciences > 330 Economics
• JEL Classification: G21, E53
• Language: English