Non-Interest Income Activities and Bank Lending

Pejman Abedifar (1) , Philip Molyneux (2) , Amine Tarazi (1)

1 LAPE - Laboratoire d'Analyse et de Prospective Economique
2 Business School

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

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

Domaines: Economies et finances

Pejman Abedifar, Philip Molyneux, Amine Tarazi. Non-Interest Income Activities and Bank Lending. 2014. ⟨hal-00947074v1⟩