Banks may be more efficient if they are better capitalised, but the effects differ depending on the bank's characteristics, research published by the Central Bank of Colombia on July 9 finds.

The influence of risk-taking on bank efficiency, by Miguel Sarmiento and Jorge Galán, builds its analysis around a "stochastic frontier model", which helps capture unobserved heterogeneity, the authors say.

In line with other research, they find banks with higher credit risk exposures tend to have lower