The Enigma of Non-Interest Income Convergence

Posted: 2 Aug 2010 Last revised: 12 Mar 2011

See all articles by Angelos A. Antzoulatos

Angelos A. Antzoulatos

University of Piraeus - Department of Banking and Financial Management

Ekaterini Panopoulou

Essex Business School

Chris Tsoumas

Hellenic Open University

Date Written: June 3, 2009

Abstract

Over the past quarter century, the great wave of financial liberalization, together with advances in information-processing-technology and finance theory, created severe competitive pressures on both the asset and liability sides of bank balance sheets and, on the positive side, allowed banks to offer more products and services. Responding strategically, banks shifted away from traditional intermediation activities to fee-earning and trading activities. Yet, as we document using the panel convergence methodology developed by Phillips and Sul (2007a), this shift exceeded what one could reasonably expect. Specifically, the share of non-interest income has been converging in the OECD countries providing a strong indication that the aforementioned common competitive pressures dominated the bank-specific and country-specific factors that affect the composition of bank income. Among the policy implications, the systemic risk on a global scale is likely to be greater than that indicated by bank-level and country-level analysis.

Keywords: Non-interest income, banks, logt test, transition curves

JEL Classification: G21, C32, C33

Suggested Citation

Antzoulatos, Angelos A. and Panopoulou, Ekaterini and Tsoumas, Chris, The Enigma of Non-Interest Income Convergence (June 3, 2009). Applied Financial Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1413955

Angelos A. Antzoulatos (Contact Author)

University of Piraeus - Department of Banking and Financial Management ( email )

80 Karaoli & Dimitriou Str.
18534 Piraeus, 185 34 -GR
Greece

Ekaterini Panopoulou

Essex Business School ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

Chris Tsoumas

Hellenic Open University ( email )

Parodos Aristotelous 18
26335 Patra
Greece

HOME PAGE: http://www.eap.gr/index_en.php

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
859
PlumX Metrics