Product Mix and Earnings Volatility at Commercial Banks : Evidence from a Degree of Leverage Model

  title={Product Mix and Earnings Volatility at Commercial Banks : Evidence from a Degree of Leverage Model},
  author={R Andrea Deyoung and Karin P. Roland},
Commercial banks’ lending and deposit-taking business has declined in recent years. Deregulation and new technology have eroded banks’ comparative advantages and made it easier for nonbank competitors to enter these markets. In response, banks have shifted their sales mix toward noninterest income — by selling ‘nonbank’ fee-based financial services such as mutual funds; by charging explicit fees for services that used to be ‘bundled’ together with deposit or loan products; and by adopting… CONTINUE READING
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