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 identify the optimal level of risk-weighted assets that maximizes banks’ returns in the full sample of US banks over the period 1996–2011. We find that this optimal level is...