The presence of a trade-off is dependent on the modelling approach used and the empirical method and time period considered. Although this is a very brief review, it is reasonable to say that no concrete policy conclusions can yet be drawn from the academic literature on the relationship between efficiency and stability.
Even if the nexus between the two concepts still requires further theoretical and empirical study, public policy is confronted – already here and now – with real, practical challenges in responding to developments in the financial system which affect the complex, multi-faceted, and time-varying interrelation between financial stability and efficiency.