Non-Interest Income Activities and Bank Lending - HAL-SHS - Sciences de l'Homme et de la Société Accéder directement au contenu
Article Dans Une Revue Journal of Banking and Finance Année : 2018

Non-Interest Income Activities and Bank Lending

Philip Molyneux
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Résumé

This paper investigates the impact of non-interest income businesses on bank lending. Using quarterly data on 8,287 U.S. commercial banks over 2003-2010, we find that the non-interest income activities of banks with total assets above $100 million ('non-micro' banks) influence credit risk. In particular, banks that have higher income from fiduciary activities have lower credit risk. The impact is more pronounced during the post-crisis period. Our findings suggest that fiduciary activities induce managers to behave more prudently in lending because such activities are found to increase banks' franchise value. Other non-interest income activities that may be thought to have an influence on lending - such as service charges on deposit accounts - do not appear to have any robust relationship with the quality of credit extended. Moreover, we find little evidence of income or price cross- subsidization between traditional intermediation and non-interest income activities, except for fiduciary activities after the crisis. Furthermore, we find that micro banks suffer from diseconomies in joint production of non-interest income activities and lending.
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Dates et versions

hal-01636263 , version 1 (16-11-2017)

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  • HAL Id : hal-01636263 , version 1

Citer

Pejman Abedifar, Philip Molyneux, Amine Tarazi. Non-Interest Income Activities and Bank Lending. Journal of Banking and Finance, 2018, 87, pp.411-426. ⟨hal-01636263⟩

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