Diversification in banking
Subtitle: is noninterest income the answer?
By: Kevin J. Stiroh.
Contributors: Federal Reserve Bank of New York.
Series: Staff reports ;; no. 154; Staff reports (Federal Reserve Bank of New York : Online) ;; no. 154.
Publisher: Federal Reserve Bank of New York
Published: 2002
Place of publication: [New York, N.Y.]
Language: eng
Format: Electronic resource
Subjects: Banks and banking.; Diversification in industry.
Description: "The U.S.  banking industry is steadily increasing its reliance on nontraditional business activities that generate fee income, trading revenue, and other types of noninterest income.  This paper assesses potential diversification benefits from this shift.  At the aggregate level, declining volatility of net operating revenue reflects reduced volatility of net interest income, rather than diversification benefits from noninterest income, which is quite volatile and has become more correlated with net interest income.  At the bank level, growth rates of net interest income and noninterest income have also become more correlated in recent years.  Finally, greater reliance on noninterest income, particularly trading revenue, is associated with higher risk and lower risk-adjusted profits.  These results suggest little obvious diversification benefit from the ongoing shift toward noninterest income"--Federal Reserve Bank of New York web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 3/1/2005.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.