DP6635 Does Interbank Borrowing Reduce Bank Risk?
|Author(s):||Valeriya Dinger, Jürgen von Hagen|
|Publication Date:||January 2008|
|Keyword(s):||bank risk, interbank market, market discipline, transition countries|
|Programme Areas:||International Macroeconomics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=6635|
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.