bank liabilities to reduce the probability of bank runs. These aspects of banking affect a bank's choice of risk versus … expected return, which, in turn, affects bank performance. Banks have an incentive to reduce risk to protect their valuable …-of-funds subsidy of mispriced deposit insurance. These are contrasting incentives tied to bank size. Measuring bank performance and its …

from the cross-section efficiency literature. Our most striking result is that during 1991-1997, cost productivity worsened … while profit productivity improved substantially, particularly for banks engaging in mergers. The data are consistent with …