In this paper we reconsider the formal estimation of the risk of financial intermediaries. Risk is modeled as the variability of the profit function of a representative intermediary, here bank, as formally considered in finance theory. In turn, banking theory suggests that risk is determined...

In this paper we consider statistical inference using Approximate Bayesian Computation (ABC) and resolve two problems: The choice of summary statistics and the choice of constant in deciding whether synthetic and real data are close in a certain norm. We argue that the natural choice for summary...