%0 Journal Article
%T Estimating Risk and Excessive Risk-Taking in Colombia¡¯s Commercial Banks
%A Diego Ramos
%J Desarrollo y Sociedad
%D 2012
%I Universidad de los Andes
%X The document estimates the risk embraced by Colombian commercial banks, and establishes a measurement of excessive risk-taking that is consistent with such estimation. The construction of the excessive-risk measurement follows the basic efficient-portfolio framework, in which the variance of an aggregate portfolio is minimized subject to an observed return. Return and risk-taking in Colombia¡¯s banking industry appear to decrease between December 2007 and May 2011. In spite of this, the excess-risk exhibits an upward trend, and denotes an increasing suboptimality when considered as a proportion of the observed risk. Hence, a reduction in the risk embraced by Colombian banks paradoxically coincides with an increase in their instability.
%K Financial stability
%K risk attitudes
%K risk
%K excessive risk-taking
%K bank
%U http://economia.uniandes.edu.co/investigaciones_y_publicaciones/CEDE/Publicaciones/Revista_Desarrollo_y_Sociedad/Ediciones/Revista_Desarrollo_y_Sociedad_No._70/Estimating_Risk_and_Excessive_Risk-Taking_in_Colombia_s_Commercial_Banks