 The relationship between net interest margin and noninterest income using a system estimation approachJames Nguyen Journal of Banking & Finance, 2012, vol. 36, issue 9, 2429-2437 Abstract: This paper examines the determinants of bank net interest margin (NIM) and non-traditional banking activities (NII). A system estimation approach is employed to control for the simultaneity between NIM and NII for commercial banks in a group of 28 financially liberalized countries during the period between 1997 and 2004. We find a statistically significant negative relationship between NIM and NII for the period between 1997 and 2002. A generally positive but statistically insignificant association between NIM and NII is found for the subsequent period (2003–2004). Banks’ increasing involvement in non-traditional activities is negatively correlated with risk-adjusted profitability measures in the former subperiod, suggesting no obvious diversification benefits. However, the share of noninterest income is positively related to the return on assets (ROA) and the return on equity (ROE) for the latter subsample. Keywords: Bank margins; Market structure; Diversification; Noninterest income (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:36:y:2012:i:9:p:2429-2437 DOI: 10.1016/j.jbankfin.2012.04.017 Access Statistics for this article Journal of Banking & Finance is currently edited by Ike Mathur More articles in Journal of Banking & Finance from Elsevier |
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