Abstract
This study examines the determinants of non-interest income and the implications of non-interest income for bank risk-return trade-offs, medium-term profitability and profit variability. Over a number of specifications, we find that cost-efficiency is key to generating and profiting from non-interest income as are volume of loans generated and liquid assets held by a bank. Large banks may also profit from non-interest income but do not seem to rely on it for their profits. We do not find non-interest income detrimental to bank solvency in our sample, perhaps because the nature of non-interest income of our sample banks may not expose bank capital to significant risk of loss. This could change as the economy and financial services demand increases in sophistication.
Original language | English |
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Pages (from-to) | 595-612 |
Number of pages | 18 |
Journal | Global Business Review |
Volume | 20 |
Issue number | 3 |
DOIs | |
Publication status | Published - 1 Jun 2019 |
Externally published | Yes |
Keywords
- Ghana
- Non-interest income
- bank performance
- revenue diversification