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Non-Interest Income Activities and Bank Lending

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Author Info

  • Pejman Abedifar

    ()
    (LAPE - Laboratoire d'Analyse et de Prospective Economique - Université de Limoges : EA1088 - Institut Sciences de l'Homme et de la Société)

  • Philip Molyneux

    ()
    (Business School - Bangor University, Bangor)

  • Amine Tarazi

    ()
    (LAPE - Laboratoire d'Analyse et de Prospective Economique - Université de Limoges : EA1088 - Institut Sciences de l'Homme et de la Société)

Abstract

This paper investigates the impact of non-interest income businesses on bank lending. Using quarterly data on 7,578 U.S. commercial banks between 2003 and 2010 we find that, for banks with total assets above $100 million, non-interest income activities influence credit risk and loan portfolio compositions. Banks which emphasize fiduciary and life insurance businesses appear to have a lower credit risk. Moreover, we find that a greater reliance on loan servicing is associated with lower lending-deposit spreads. Finally, we find little evidence to suggest that cost complementarity explains the joint production of lending and relationship expanding non-interest income businesses

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Bibliographic Info

Paper provided by HAL in its series Working Papers with number hal-00947074.

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Date of creation: 12 Feb 2014
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Handle: RePEc:hal:wpaper:hal-00947074

Note: View the original document on HAL open archive server: http://hal.archives-ouvertes.fr/hal-00947074
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Related research

Keywords: Scope Expansion; Non-interest Income; Relationship Banking; Credit Risk; Spread; Loan Composition; Cost Complementarities;

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References

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