Delis, Manthos D.; Karavias, Yiannis - In: Journal of Financial Stability 16 (2015) C, pp. 13-30
Standard banking theory suggests that there exists an optimal level of credit risk that yields maximum bank profit. We … 1996–2011. We find that this optimal level is cyclical for the average bank, being higher than the realized credit risk in … monetary policy in stable periods, where the optimal credit risk is higher than the realized credit risk, increases the gap …