8/6/2019 _The Changing Structure Of Banks Income An Empirical Investigation

1/16

THE CHANGING STRUCTURE OF BANKS INCOM

EMPIRICAL INVESTIGATION1

E Philip Davis

Brunel University

West London

and

Klaus Tuori

European Central Bank

Frankfurt

Introduction

In recent years, the changing nature of the banking and financial services indu

increasing focus of policy interest and of academic study. It has been argu

deregulation accompanied by technological development has changed the env

financial intermediaries, and in particular banks, are operating. In Europe, furth

seems likely to be provoked by EMU, in particular changes linked to the integ

financial markets (De Bandt 1998). Depending on the point of view of the commen

may be seen as (i) necessary and welcome progress towards a more efficient fina

provides financial intermediation more cost-efficiently and allocates capital more

been previously the case; and/or (ii) they are seen as threatening to financia

development towards a financial system that is prone to crises at frequent intervals

One aspect of overall financial change is a shift in the pattern of business undertak

is thought to be manifested in a relative increase in fee and other non-interest

interest income. Among the key underlying factors have been increased compe

banks and vis--vis securities markets), which has put interest margins under pre

securitisation, which has increased the scope for non-interest earnings; an

requirements, which encourage economy in the use of capital by various off-balanc

comm.on with the United States and Japan, these features have of course been pr

of EU countries, albeit to a varying degree.

1 E Philip Davis is Professor of Economics and Finance at Brunel University, who was formerl

European Central Bank. Klaus Tuori was also formerly an economist at the European Central Ba

this work was undertaken while Davis was at the ECB. Davis is also a Visiting Fellow at NIESR

the LSE Financial Markets Group, Associate Fellow of the Royal Institute of International Affa

of the Pensions Institute at Birkbeck College, London. Views expressed are those of the authors a

of the ECB or Bank of England.

8/6/2019 _The Changing Structure Of Banks Income An Empirical Investigation

2/16

8/6/2019 _The Changing Structure Of Banks Income An Empirical Investigation

3/16

8/6/2019 _The Changing Structure Of Banks Income An Empirical Investigation

4/16

8/6/2019 _The Changing Structure Of Banks Income An Empirical Investigation

5/16

8/6/2019 _The Changing Structure Of Banks Income An Empirical Investigation

6/16

8/6/2019 _The Changing Structure Of Banks Income An Empirical Investigation

7/16

8/6/2019 _The Changing Structure Of Banks Income An Empirical Investigation

8/16

8/6/2019 _The Changing Structure Of Banks Income An Empirical Investigation

9/16

8/6/2019 _The Changing Structure Of Banks Income An Empirical Investigation

10/16

8/6/2019 _The Changing Structure Of Banks Income An Empirical Investigation

11/16

8/6/2019 _The Changing Structure Of Banks Income An Empirical Investigation

12/16

8/6/2019 _The Changing Structure Of Banks Income An Empirical Investigation

13/16

8/6/2019 _The Changing Structure Of Banks Income An Empirical Investigation

14/16

8/6/2019 _The Changing Structure Of Banks Income An Empirical Investigation

15/16

8/6/2019 _The Changing Structure Of Banks Income An Empirical Investigation

16/16