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


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.