TY - JOUR

T1 - Banks' noninterest income and securities holdings in a low interest rate environment: The case of Italy

AU - Molyneux, Philip

AU - Reghezza, Alessio

AU - Torriero, Chiara

AU - Williams, Jon

N1 - Reghezza acknowledges financial support from the Schiavone‐Tantazzi family from whom he received a scholarship titled “Dott. Giuseppe Tantazzi” issued by the Rotary Club Genoa (distretto 2032).

PY - 2021/1

Y1 - 2021/1

N2 - Using a sample of 440 Italian banks over the period 2007–2016, we find that low interest rates motivate banks to expand their fee and commission income and to restructure their securities portfolios. A granular breakdown suggests that banks grow noninterest income in various ways, including portfolio management, brokerage and consultancy services and increase fee income from current account and payment services. In addition, banks rebalance securities portfolios away from those “held for trading” to securities “available for sale” and “held to maturity.” Our findings allude to different behavior between large and small banks: while larger banks increase brokerage, consultancy and portfolio management services, smaller banks generate fees from customer current accounts.

AB - Using a sample of 440 Italian banks over the period 2007–2016, we find that low interest rates motivate banks to expand their fee and commission income and to restructure their securities portfolios. A granular breakdown suggests that banks grow noninterest income in various ways, including portfolio management, brokerage and consultancy services and increase fee income from current account and payment services. In addition, banks rebalance securities portfolios away from those “held for trading” to securities “available for sale” and “held to maturity.” Our findings allude to different behavior between large and small banks: while larger banks increase brokerage, consultancy and portfolio management services, smaller banks generate fees from customer current accounts.

KW - Fee and Commission Income

KW - Securities

KW - Low interest rates

KW - Unconventional monetary Policy

KW - Italian Banking Sector

M3 - Article

VL - 27

SP - 98

EP - 119

JO - European Financial Management

JF - European Financial Management

SN - 1354-7798

IS - 1

ER -