efficiency, and iii) input-mix efficiency. Risk efficiency, a concept borrowed from modern portfolio theory, measures the …

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 …