The linkage between bank net interest margins and non-interest income : The case of the Cambodian Banking industry

vithyea, You (2014): The linkage between bank net interest margins and non-interest income : The case of the Cambodian Banking industry.

Abstract

This research paper studies the relationship between bank net interest margin (NIM) and non-interest income (NII) using Cambodian banking data. The research focuses on the contribution of the NII, which is the non-traditional banking activity, to the banking profitability. The analysis runs a three-stage least square system to handle the NIM and NII employing 28 banks data from 2004-2010. For the growing period, there is a trade-off between interest margin and non-interest income. It is argued that banks increase non-traditional activities associates with the reduction in net interest margin and vice-versa. This paper also finds that the non-traditional activities have positive causal effect on net interest margin in the post financial crisis period.

• Item Type: MPRA Paper
• Language: English
• Keywords: Bank interest margin, non-interest income, Cambodian banking, bank risk
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages

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