Adapting Bank Business Models: Financial Stability Implications of Greater Reliance on Fee and Commission Income

Christoffer Kok, Harun Mirza, Csaba Móré and Cosimo Pancaro

Financial Stability Review, 2016, vol. 2

Abstract: The euro area banking sector is faced with cyclical and structural challenges, which are hampering many banks’ ability to generate sustainable profits. In particular, the prolonged period of low nominal growth and low yields compresses net interest income, which traditionally has been (and still is) euro area banks’ main source of income. One way for banks to compensate for compressed net interest margins could be to adapt their business models, moving towards more fee and commission-generating activities. This article discusses the challenges involved in boosting fee and commission income and highlights some of the potential financial stability implications related to a greater reliance on these income sources. JEL Classification: G00

Keywords: cyclical factors; financial stability (search for similar items in EconPapers)
Date: 2016-11
Note: 508948
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:ecb:fsrart:2016:0002:3

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