Non-interest income management of banks in a global low interest rate environment
|Author:||Mgr. Vendula Bečvaříková|
|Year:||2016 - summer|
|Leaders:|| prof. PhDr. Petr Teplý Ph.D.
|Work type:|| Finance, Financial Markets and Banking
|Awards and prizes:|
|Abstract:||The significant change of the banking business models is easily observable
in the current banking industry. Banks are forced to find additional source of income
besides the one from traditional activities and thus the non-interest income is growing
in importance. One of the reasons behind is that the banks need to recover
from severe impacts of financial crisis in 2008-2010 and they want to adapt
to the environment of low interest rates which has been occurring in the market since
2011. In this thesis, we analyze the presence of direct effect of non-interest income
(proxied by fee income) on banks’ performance using data of 220 commercial and
investment banks from U.S. and EU-28 countries over the period of 2007-2014.
Using System Generalized Methods of Moment, the direct effect was not detected.
However, we conclude that economy with low inflation rate and growing gross
domestic product improves the banks’ profitability, as well as high capitalization and
operating and credit quality efficiency. Furthermore, we found out that the volatility
of the non-interest income has increased earlier than the crisis in 2008-2010 and it has
been achieving almost continuous level till 2011 when it started decreasing again.
Thus the hypothesis about relationship between volatility and financial crisis was