A loan that is extended by a bank to another in the same banking system (in the so-called interbank market). Interbank markets are typically perceived to be dominated by overnight deposits and repos. These consist of short-term instruments traded in rather risk-avert set-ups. These loans represents certain means by which banks can co-insure short-term liquidity risks.
Interbank loan take two forms: call interbank loans and term interbank loans, depending on maturity. These loan may also include overnight interbank loans.
