Colombian paper paints nuanced picture of bank risk and efficiency link

The Central Bank of Colombia

Banks may be more efficient if they are better capitalised, but the effects differ depending on the bank's characteristics, research published by the Central Bank of Colombia on July 9 finds.

The influence of risk-taking on bank efficiency, by Miguel Sarmiento and Jorge Galán, builds its analysis around a "stochastic frontier model", which helps capture unobserved heterogeneity, the authors say.

In line with other research, they find banks with higher credit risk exposures tend to have lower

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