IDEAS home Printed from https://ideas.repec.org/a/col/000090/010423.html
   My bibliography  Save this article

Estimating Risk and Excessive Risk-Taking in Colombia´s Commercial Banks

Author

Listed:
  • Diego Ramos Toro

Abstract

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.

Suggested Citation

  • Diego Ramos Toro, 2013. "Estimating Risk and Excessive Risk-Taking in Colombia´s Commercial Banks," Revista Desarrollo y Sociedad, Universidad de los Andes,Facultad de Economía, CEDE, January.
    • Handle: RePEc:col:000090:010423
    as

    Download full text from publisher

    File URL: http://economia.uniandes.edu.co/revistadys/Articulo70_6.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Financial stability; risk attitudes; risk; excessive risk-taking; bank;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:col:000090:010423. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Universidad De Los Andes-Cede (email available below). General contact details of provider: https://edirc.repec.org/data/ceandco.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.