Pagratis, Spyros; Karakatsani, Eleni; Louri, Helen - Bank of Greece - 2014
We find evidence that banks target return on equity (RoE) and make active use of leverage to affect the speed of adjustment towards RoE targets. That holds for both the pre- and post-2007 periods and especially for banks that tend to operate with above median leverage among their peer group. As...