Discussion paper

DP6635 Does Interbank Borrowing Reduce Bank Risk?

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.


von Hagen, J and V Dinger (2008), ‘DP6635 Does Interbank Borrowing Reduce Bank Risk?‘, CEPR Discussion Paper No. 6635. CEPR Press, Paris & London. https://cepr.org/publications/dp6635