Banking Innovations and New Income Streams: Impact on Banks' Performance

Trivedi, Smita Roy

doi:10.1177/0256090915573616

Cited by 31 publications

(35 citation statements)

References 13 publications

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“…Findings showed a positive impact of income diversification on the level of bank in Pakistan. Similarly, Trivedi (2015) used a sample of 81 banks in India over the period [2005][2006][2007][2008][2009][2010][2011][2012]. Major findings indicate that the rising share of fee-based income and non-interest income in total income and diversification has a positive impact on profitability.…”

Section: Noninterest Income and Bank Performancementioning

confidence: 99%

“…reported the positive impact of non-interest income (NII henceforth) on returns and risks (Ismail et al (2015), Trivedi (2015), Lee et al (2014), Meslier et al (2014) and Saunders et al (2014)), some other papers have found that traditional activities are considered as a key factor for more profitability and less risk (Pringle's (1974), Graddy and Kyle (1979), Molyneux et al (1998), Ramadan et al (2011), Carbó-Valverde et al (2011 and Ekpu and Paloni (2015)). These conclusions show that the effects of non-interest income differ from one country to another one.…”

mentioning

confidence: 99%

“…In Australia, the average net interest margin during the period 1987-2004 was around 2.236% whereas the NII was 1.835% (Williams and Prather 2010). In India, the contribution of interest income (IIC) in total income dominates the NII since the average IIC as a percentage of total income was 86.40% during the period 2005-2011, while NII represents only 13.60 (Trivedi 2015).…”

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confidence: 99%

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Diversification, bank performance and risk: have Tunisian banks adopted the new business model?

2017

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Background: The objective of this paper is threefold. First, we test the most important factors that determine the level of non-interest income for Tunisian banks. Second, we study the impact of non-interest income on banks' profitability measured by both return on assets (ROA) and return on equity (ROE). Finally, we investigate the relationship between non-interest income and the level of risk taking. Methods: To achieve this goal, we used annual data of 20 Tunisian banks during the period 2005-2012. In the empirical section we performed a Dynamic Panel Data model. Results: Empirical results indicate that the main determinants of non-interest income are: relative performance (RROA and RROE), bank size, loan specialization and new epayments channels, automatic teller machine (ATM) and credit cards). We also find that diversification increases bank performance for both ROA and ROE measures. Eventually, non-interest income appears to be negatively and significantly correlated with the effect on the level of risk. Conclusions: Tunisian banks are invited to more diversify their activities and do not focus only on the traditional activity. The noninterest income seems to be associated with a higher level of profitability and a lower risk.

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Section: Noninterest Income and Bank Performancementioning

confidence: 99%

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confidence: 99%

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confidence: 99%

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Diversification, bank performance and risk: have Tunisian banks adopted the new business model?

2017

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“…Although the majority of the research papers on the topic of FinTech is theoretical, rather than empiric in nature (Blach, 2011, Arner et al, 2015, Vaškelaitis, 2010, Dorfleitner et al, 2017, Puschmann, 2016, Schindler, 2016, Walker, 2017, Kalmykova et al, 2015,they provide definitions of financial technologies, define the development stages and operating models, analyze the existing regulations and the impact of technologies, and emergence of risks; however, in view of the further development of the FinTech sector, other areas have also attracted the interest of researchers (Kagan et al, 2005;DeYoung, 2005;Cyree et al, 2009;Trivedi, 2015, Tunay et al, 2015Yen, 2013, Heffernan et al, 2008Buss et al, 2017;Bratasanu, 2017;Mwaura et al, 2016;Levišauskaitė, 2004;Vargas, 2008;Gimpel, 2015;Lee et., 2017;Mansilla-Fernandez, 2017), focusing more on the level of FinTech development of the country, the impact of the sector upon the national economy, the financial sector, or the possibilities of further development of the FinTech sector. For instance, Vargas (2008) found that banks employ financial technologies to a lesser extent than FinTech companies, but their role remains important and banks are likely to increase the use of financial technologies in the future.…”

Section: Literature Reviewmentioning

confidence: 99%

Possibilities for Financial Technology Sector Development and its Impact on Banking Sector Profitability in Lithuania

Keliuotytė-Staniulėnienė

Smolskytė

2019

Economics and Culture

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Research purpose. The development of financial technology sector (fintech) poses a challenge for traditional financial institutions. Therefore, it is important to analyze not only how financial technologies can change, but also how the fintech sector affects banks and their profitability. The aim of the paper is to analyze the possibilities for the development of financial technology sector and quantitatively evaluate its impact on the banking sector’s profitability in Lithuania. Design / Methodology / Approach. After the analysis of academic literature and statistical data, the authors used expert evaluation method in order to identify development opportunities of fintech in Lithuania and correlation-regression analysis was applied to evaluate the impact of fintech on the profitability of the Lithuanian banking sector. Findings. According to the results of expert assessment research, Lithuania possesses favorable conditions for fintech enterprises to enter the Lithuanian finance market; it is expected that this sector will continue to rapidly expand mostly in payments and banking business models. Correlation-regression analysis showed that fintech indicators has an effect on the banking sector’s profitability but the effect in not very significant. The significance of the connection is lower because banking sector adapts technologies and is influenced by fintech from inside and outside the environment. Originality / Value / Practical implications. The fintech sector in Lithuania is still new and so far very little researched. The outcomes of this research have expanded the scope of research of the Lithuanian fintech sector. The obtained results would be useful and relevant to (i) the government sector to manage risks and ensure stability in the financial sector; (ii) financial sector entities to monitor possible developments and prepare them accordingly; and (iii) banking sector to analyze the impact of technology and fintech entities on them and take strategic decisions in this regard.

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“…The stability in financial performance of banks did not get supported by the asset base. Trivedi (2015), conducted research to highlight comparison of diversification in source of income generated for different categories of banks . Stiroh( 2004) and many more have shown the direct positive role of this income diversification on net earnings of banks.…”

Section: Review Of Past Researchmentioning

confidence: 99%

Income Diversification and its Impact on Profitability of Banks

Kumar*,

Chaudhuri,

Sharma

2019

IJRTE

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The paper is studying diversification in income of Indian banks and impact of income diversification on profitability and sustainability of industry, mainly in environment shift of recent financial crisis. Statistical analysis: The study is a multivariate regression analysis to find diversification score on the secondary data for Indian banking industry for sample period of 10 years, from 2008 to 2017. Score of diversifications are calculated at two stages as DS (1), DS (2) to find share of nontraditional income in total income and categorization in nontraditional income respectively. The impact on the different income categories ; Share of Non- Interest Income(SNI), Share of fee Based Income (S FI), Share of Other Income(SOT), are tested against selected control variables. F-test used to test hypothesis as direct association with two set of variables. Further criterion scores techniques (SIC), (AIC) and (HQIC) are use as model improvement to test goodness of fit of the model. The study found that income shift of new business lines helps banks to improve their profitability by dint of many barriers in implementation. The growth trend of such income is not stable during whole study period, majorly due to global financial crisis. In the library of literatures, the share of non-interest based income activities and fee based income sources has been more distinct for Private and Foreign banks, even though SBI and Its associate’s banks are not far behind them. The role of the study to highlight the path for banks adopting new Non-interest income streams to enhance profitability and continuity in profitability. As reported, diversification in non-interest income sources may have positive impact on overall profitability and risk-adjusted performance along with improvement in stability of banking system. Other non-interest incomes are more changeable in compare to Fee based income generated by fee, commission and brokerage activity. By dint of many good effect of diversification banks, mainly in Indian context should take appropriate majors while diversification of its income.

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Banking Innovations and New Income Streams: Impact on Banks' Performance

Cited by 31 publications

References 13 publications

Diversification, bank performance and risk: have Tunisian banks adopted the new business model?

Diversification, bank performance and risk: have Tunisian banks adopted the new business model?

Possibilities for Financial Technology Sector Development and its Impact on Banking Sector Profitability in Lithuania

Income Diversification and its Impact on Profitability of Banks

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