The Impact of Non Interest Income on Bank Risk in Australia

By Barry Williams. 2016

163 citations recorded by the source corpus.

The relationship between bank revenue composition and bank risk in Australia is modeled using data drawn from Australian bank confidential regulatory returns. It is found that those banks with lower levels of non-interest income and higher revenue concentration are less risky, consistent with previous international evidence. Evidence is also found supportive of increased risk due to too-big-to-fail effects, with this risk increase being offset by a decline in large bank risk after the crisis of 2007–2008. Non-interest income is generally found to be risk increasing, but some types of non-interest income are risk reducing when bank specialization effects are considered. It is also found that the 2008 financial crisis changed some aspects of the relationship between bank risk and revenue composition.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/0e0de9d02ce8aa5309bd28118a6027b342602213

Citations in the corpus

• Banking stability determinants in Africa (2018, unknown): “Non-interest income (NII) measures profit diversification in the banking sector and reflects the banking sector’s reliance on fee-based and non-interest source of funds as opposed to their reliance on interest income (Smith et al, 2003; Williams, 2016; Ozili 2017a).”
• Banks’ Noninterest Income and Systemic Risk (2020, unknown): “Williams (2016) finds that noninterest income is positively related to bank risk for Australian banks.”