Does Interbank Borrowing Reduce Bank Risk?

27 Pages Posted: 5 Jun 2008

See all articles by Valeriya Dinger

Valeriya Dinger

Universität Osnabrück

Jürgen von Hagen

University of Bonn - Institute of Economic Policy; Centre for Economic Policy Research (CEPR)

Date Written: January 2008

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.

Keywords: Bank risk, interbank market, market discipline, transition countries

JEL Classification: E53, G21

Suggested Citation

Dinger, Valeriya and von Hagen, Jürgen, Does Interbank Borrowing Reduce Bank Risk? (January 2008). CEPR Discussion Paper No. DP6635, Available at SSRN: https://ssrn.com/abstract=1140564

Valeriya Dinger (Contact Author)

Universität Osnabrück ( email )

Neuer Graben
Osnabrück, 49074
Germany

Jürgen Von Hagen

University of Bonn - Institute of Economic Policy ( email )

Adenauerallee 24
D-53113 Bonn
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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