In this study, we analysed the income structure of the 30 largest banks in seven Balkan countries in the period before, during and after the global economic crisis. Considering that the structure of income primarily consists of interest-bearing and non-interest-bearing income, we analysed whether the crisis has affected the change in the structure of banks’ income in the Balkans. To analyse this, we used panel and quantile regressions models. The study additionally implemented quantile regression for checking the robustness. The results show that there is a more significant correlation between non-interest-bearing and interest-bearing income, while the correlation with net profit is more moderate. According to our results, the interest income grew in the period when reference interest rates fell and when the negative effects of the economic crisis were most pronounced. The banks in the region of the Balkans built their profits more on interest-incomes in the period before and after the economic crisis.
AdrianT., & ShinH. S. (2010). Liquidity and leverage. Journal of Financial Intermediation, 19(3), 418–437.
2.
AhmadR., & AlbaityM. (2019). The determinants of bank capital for East Asian countries. Global Business Review, 20(6), 1311–1323.
3.
BaeleL., de JongheO., & VennetR. V. (2007). Does the stock market value bank diversification?Journal of Banking and Finance, 31, 1999–2023.
4.
BakerScottR., NicholasBloom, and StevenJ. Davis.2016. Measuring economic policy uncertainty. Quarterly Journal of Economics, 131, 1593–636.
5.
BergerA. N. (2003). The economic effects of technological progress: evidence from the banking industry. Journal of Money, Credit, and Banking, 35(2), 141–176.
6.
BlazeskaS. (2015). Determinants of bank profitability in Macedonia. Mimeo
7.
BlundellR., & BondS. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87, 115–143.
8.
BoninJ. P. (2004). Banking in the Balkans: The structure of banking sectors in Southeast Europe. Economic Systems, 28(2), 141–153.
9.
BrighiP., & VenturelliV. (2016, February). How functional and geographic diversification affect bank profitability during the crisis. Finance Research Letters, 1–10. https://doi.org/10.1016/j.frl.2015.10.020
10.
BrunnermeierM., DongG., & PaliaD. (2012). Banks' non-interest income and systemic risk (Chicago Meetings Paper, US). AFA. http://dx.doi.org/10.2139/ssrn.1786738.
11.
ChenC., HuangY., & ZhangT. (2017). Non-interest income, trading, and bank risk. Journal of Financial Services Research, 51(1), 19–53. https://www.doi.org/10.1007/s10693-015-0235-9
12.
DeYoungR., & RolandK. (2001). Product mix and earnings volatility of commercial banks: Evidence from a degree of total leverage model. Journal of Financial Intermediation, 10(1), 54–84.
13.
DeYoungR., & RiceT. (2004). Non-interest income and financial performance at U.S. commercial banks. The Financial Review, 39, 101–127.
14.
DeYoungR., & &TornaG. (2013). Nontraditional banking activities and bank failures during the financial crisis. Journal of Banking and Finance, 22, 397–421.
15.
EngleE., MoshirianF., ZahgalS., & ZhangB. (2014). Banks noninterest income and global financial stability. Centre for International Finance and Regulation.
European Central Bank (ECB). (2016). Economic bulletin. https://www.ecb.europa.eu/pub/economic-bulletin/html/index.en.html
18.
FidanoskiF., ChoudhryM., DavidovićM., & SergiB. S. (2018). What does affect profitability of banks in Croatia?Competitiveness Review, 28(4), 338–367. https://doi.org/10.1108/CR-09-2016-0058
19.
GhoshA. (2020, March–April). Discerning the impact of disaggregated non-interest income activities on bank risk and profits in the post-Gramm-Leach-Bliley Act era. Journal of Economics and Business, 108. https://doi.org/10.1016/j.jeconbus.2019.105874
20.
GoddardJ., McKillopD., & WilsonJ. O. S. (2008). The diversification and financial performance of U.S. credit unions. Journal of Banking and Finance, 32, 1836–1849.
21.
GrubišićZ., ZarićS., & VukovićD. (2011). FDI inflow in see countries and its consequences in the context of the financial crisis. Finance and the performance of firms in science, education, and practice (Proceedings Paper, pp. 116–129). Tomas Bata University in Zlin, Faculty of Management and Economics, Czech Republic. Drahomira Pavelkova.
22.
HeZ., & NiuJ. (2018). The effect of economic policy uncertainty on bank valuations. Applied Economics Letters, 25(5), 345–347. https://www.doi.org/10.1080/13504851.2017
23.
HerringR. J., & SantomeroA. M. (1990). The corporate structure of financial conglomerates. In: M. H. Kosters, & A. H. Meltzer (Eds.), International Competitiveness in Financial Services. Springer. https://doi.org/10.1007/978-94-011-3876-5_17
24.
HuS., & GongD. (2018). Economic policy uncertainty, prudential regulation and bank lending. Finance Research Letters, 29, 373–378. https://www.doi.org/10.1016/j.frl.2018.09.004
25.
JobstA., & HuidanL. (2016, August). Negative interest rate policy (NIRP): Implications for monetary transmission and bank profitability in the Euro Area (IMF Working Paper No. WP/16/172). IMF.
26.
KidoY. (2016). On the link between the US economic policy uncertainty and exchange rates. Economics Letters, 144, 49–52. https://doi.org/10.1016/j.econlet.2016.04.022
27.
KoenkerR. W., & BassettG. Jr. (1978). Regression quantiles. Econometrica, 46(1), 33–50.
28.
KöhlerM. (2014a). Business models in banking—How did they evolve and how do they need to be changed in the post-crisis period?Journal of Financial Perspectives, 2(I), 161–176.
29.
KöhlerM. (2014b). Does non-interest income make banks more risky? Retail vs. investment-oriented banks. Review of Financial Economics, 23, 182–193.
30.
KöhlerM. (2015). Which banks are more risky? The impact of business models on bank stability. Journal of Financial Stability, 16, 195–212.
31.
LelyveldI., & KnotK. (2009). Do financial conglomerates create or destroy value? Evidence for the EU. Journal of Banking & Finance, 33(12), 2312–2321.
32.
LepetitL., NysE., RousP., & TaraziA. (2008). The expansion of services in European banking: Implications for loan pricing and interest margins. Journal of Banking and Finance, 32, 2325–2335.
33.
LopezJ. A., & SpiegelM. M. (2018). Why have negative nominal interest rates had such a small effect on bank performance? Cross country evidence (Working Paper No. 2018-07). Federal Reserve Bank of San Francisco. https://doi.org/10.24148/wp2018-07
34.
MaitiM. (2019). OLS versus quantile regression in extreme distributions. Contaduría y administración, 64(2), 1–11.
MaitiM., & MaitiJ. (2020). A study on India's first offshore LIDAR-based wind profiling at Gulf of Khambhat. Journal of Public Affairs, 20(2), e2044.
37.
MaitiM., EssonI. A., & VukovicD. (2020). The impact of interest rate on the demand for credit in Ghana. Journal Public Affairs, 20, e2098.
38.
MazurM., & ZhangS. (2015, November). Diversification discount over the long run: New perspectives. Finance Research Letters, 15, 93–98. https://doi.org/10.1016/j.frl.2015.08.008
39.
OrtolanoA., & AngeliniE. (2020). Eurozone crisis and banks’ creditworthiness: What is new for credit default swap spread determinants?Global Business Review. https://doi.org/10.1177/0972150919886172
40.
PaunovicS., PopovicB., & KovacevicD. (2016). Profitability of banks in Bosnia and Herzegovina: Panel analysis. Proceedings of the Faculty of Economics in East Sarajevo, 1(13), 11–16.
41.
PetrevskiG. (2015). Bank-specific determinants of profitability in Macedonia. In: V. Filipovski (Ed.), Economic recovery in the post-crisis period (pp. 239–249). Faculty of Economics—Skopje, Sts. Cyril and Methodius University in Skopje.
42.
RajanR., ServaesH., & ZingalesL. (2000). The cost of diversity: The diversification discount and inefficient investment. Journal of Finance, 55, 35–80.
43.
RoodmanD. (2009). How to do xtabond2: An introduction to difference and system GMM in Stata. Stata Journal, 9, 86–136.
44.
SmithR., StaikourasC., & WoodG. (2003). Non-interest income and total income stability (Working Paper). Bank of England.
45.
SteinJ. C. (2002). Information production and capital allocation: Decentralized versus hierarchical firms. Journal of Finance, 57(5), 1891–922.
46.
StirohK. (2004). Do community banks benefit from diversification?Journal of Financial Services Research, 25(2), 135–60.
47.
StirohK., & RumbleA. (2006). The dark side of diversification: the case of US financial holding companies. Journal of Banking and Finance, 30, 2131–261.
48.
StulzR. (1990). Managerial discretion and optimal financial policies. Journal of Financial Economics, 26, 3–27.
49.
TeeceD. J. (1982). Towards an economic theory of the multiproduct firm. Journal of Economic Behavior and Organization, 3(1), 39–63.
50.
TranD. V., HoangK., & NguyenC. (2020, June 7). How does economic policy uncertainty affect bank business models?Finance Research Letters. https://doi.org/10.1016/j.frl.2020.101639UnitedNations
51.
VukovicD. B., & ProsinV. (2018). The prospective low risk hedge fund capitalallocation line model: Evidence from the debt market. Oeconomia Copernicana, 9(3), 419–439.
52.
VukovicD., LapshinaK., & MaitiM. (2019). European monetary union bond market dynamics: Pre and post crisis. Research in International Business and Finance, 50(C), 369–380.
53.
VukovicD., VyklyukY., MatsiukN., & MaitiM. (2020). Neural network forecasting in prediction Sharpe ratio: Evidence from EU debt market. Physica A: Statistical Mechanics and its Applications, 1–20. https://doi.org/10.1016/j.physa.2019.123331
54.
VukovicD., LapshinaK., & MaitiM. (2021). Wavelet coherence analysis of returns, volatility and interdependence of the US and the EU money markets: Pre and post crisis. The North American Journal of Economics and Finance, 58, 101457.
55.
WilliamsB. (2007). Factors determining net interest margins in Australia: Domestic and foreign banks. Financial Markets, Institutions and Instruments, 16, 145–165.
56.
WilliamsB. (2016). The impact of non-interest income on bank risk in Australia. Journal of Banking & Finance, 73(C), 16–37. https://doi.org/10.1016/j.jbankfin.2016.07.019
57.
WilliamsB., & PratherL. (2010). Bank risk and return: the impact of bank non-interest income. International Journal of Managerial Finance, 6(3), 220–244. https://doi.org/10.1108/17439131011056233
58.
UN. (2009). World economic situation and prospects. https://www.un.org/en/development/desa/policy/wesp/wesp_archive/2009wespupdate.pdf
59.
ZhouK. (2014). The effect of income diversification on bank risk: evidence from China. Emerging Markets Finance and Trade, 50(sup3), 201–213.
Supplementary Material
Please find the following supplemental material available below.
For Open Access articles published under a Creative Commons License, all supplemental material carries the same license as the article it is associated with.
For non-Open Access articles published, all supplemental material carries a non-exclusive license, and permission requests for re-use of supplemental material or any part of supplemental material shall be sent directly to the copyright owner as specified in the copyright notice associated with the article.
