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How does non-interest income affect bank credit risk? Evidence before and during the COVID-19 pandemic

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  • Mehmood, Asad
  • De Luca, Francesco

Abstract

This paper considers the COVID-19 pandemic's role and investigates the impact of non-interest income on bank credit risk. Specifically, it performs a comparative analysis between before and during the pandemic periods. The data of listed banks are extracted from the BankFocus for 14 Asian emerging markets. The regression results indicate the positive influence of non-interest income on bank credit risk. Interestingly, the magnitude of the impact is higher in the pre-pandemic period, and it significantly reduces during the pandemic period. This study provides implications for bank practitioners and regulators.

Suggested Citation

  • Mehmood, Asad & De Luca, Francesco, 2023. "How does non-interest income affect bank credit risk? Evidence before and during the COVID-19 pandemic," Finance Research Letters, Elsevier, vol. 53(C).
    • Handle: RePEc:eee:finlet:v:53:y:2023:i:c:s1544612323000314
    DOI: 10.1016/j.frl.2023.103657
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    More about this item

    Keywords

    Income diversification; Non-interest income; Credit risk; COVID-19 pandemic;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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