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Banking fee income in the Czech Republic and the EU
Růžičková, Karolína ; Teplý, Petr (advisor) ; Lešanovská, Jitka (referee)
This thesis deals with both theoretical and practical aspects of banking fee and commission income in the European Union. Since fee income represents the largest part of non-interest income earned by banks, it remains a major challenge for bank management to set and maintain an appropriate fee policy. Nevertheless, solving for the optimal fee structure has not yet been accomplished either on a theoretical level, or in actual practice. In the thesis, we analyse fee income in EU banking sectors. Our results show that the Czech banking sector was not abnormally dependent on fee income compared to other EU countries in the period 2007-2012. As a result, we argue that the high profitability of Czech banks cannot be attributed to abnormal banking fees and commission income, but rather other factors should be considered. Moreover, we study the determinants of fee income share in individual banks and discuss the impact of market concentration on the magnitude of banking fees. We conclude that banks facing higher competition tend to expand more aggressively into non- traditional activities and therefore they report higher fee income shares. We also study the relationship between banking fees and banks' performance. The results are mixed depending on applied profitability measure, but in general, banks with...
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Banks' Income Modelling
Lelovská, Adriána ; Jakubík, Petr (advisor) ; Havránková, Zuzana (referee)
Bank profitability is one of the key inputs for macroprudential surveillance. Although we may find extensive empirical literature analyzing banks' performance, there is to our knowledge no study examining whole banking sectors. This thesis contributes to the existing research twofold. Firstly, we develop a banks' income model that considers banking sectors as a whole, using a sample of 40 countries in the period of 1997 to 2011. Secondly, we implement this model to two different restrictions of our data sample testing the model's applicability. We explore three hypotheses. Firstly, we test whether macroeconomic, industry-specific and bank-specific determinants are significant drivers of bank profitability. The final banks' income model is estimated via a dynamic GMM specification, consisting of proxies for the level of economic development, capitalization, interest-earning activities, credit quality and two lags of profitability capturing its persistency. The hypothesis is rejected since we do not find evidence of a significant industry-specific indicator. The second and third hypotheses restrict our sample to a time period before the financial crisis and banking sectors comprising only commercial banks, respectively. We conclude that the model is robust with regards to the chosen time period but...
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