Working Paper: CEPR ID: DP6635
Authors: Valeriya Dinger; Jürgen von Hagen
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 Codes: E53; G21
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| interbank borrowing (G21) | lower risk levels (G22) |
| increase in interbank position from zero to negative (F65) | lower risk levels (G22) |