During the last two decades, the Chilean banking industry has experienced a high concentration due to several mergers between its institutions. Among the reasons ar- gued for these consolidations, a potential for substantial gains in e¢ ciency is claimed. Recent studies suggest that the Chilean...

We propose a model of delegated portfolio management specialized in alternative investments, i.e., those with a high-return and high-risk profile. It is shown that in this context, as a reward for risk-taking scheme is optimal, a counter-intuitive reward for failure can also be desirable. This...

This paper characterizes the evolution of the efficiency X in the Chilean banking industry over 1987 to 2007, based on a profit frontier approach. Our results suggest that over this period the Chilean banking sector has attained just a 15% over its maximum profits. This inefficiency basically...