Search

Both interest and noninterest earnings form the two critical components of the income stream of commercial banks. While interest earnings are tied to the lending volume and prevailing interest rates primarily dictated by the monetary policy and central bank interventions, noninterest earnings can come from diversified sources like income from fiduciary activities, trading revenue, service charges on deposit accounts, fee income, etc. Noninterest earnings can be unrelated to lending volume and prevailing interest rates and possibly uncorrelated with the monetary policies. Noninterest earnings may be a more robust source of income, especially during the low-interest rate regimes. Managing the noninterest to interest earnings is a critical component of income smoothing used by the banks. Noninterest earnings have become a significant component of banks' overall earnings in the last four decades, and the ratio of noninterest to interest earnings has also grown significantly, raising questions about the primary role of the banking sector in financial intermediation as defined by the collection and disbursement of loanable funds throughout the economy. The rise in noninterest earnings also raises questions about the potential conflict of interest especially if banks earn significant consulting income from the same entities that borrow heavily from the banks. In this paper, I look at the time series dynamics of the ratio of noninterest-to-interest earnings spanning nearly four decades from 1984:Q1 to 2023:Q3 for the USA's FDICinsured commercial banking sector. Although the ratio has fluctuated over the period and risen from the baseline, it does not exhibit any non-stationarity. The presence of unit root cannot be found during the time period studied. In other words, the ratio of noninterest-to-interest earnings in the US commercial banking sector does not show any explosive and unstainable growth. In a nutshell, the rise in the ratio seems to be an outcome of the broader income diversification strategy used by the banks and not necessarily a dramatic change in the business model of US commercial banking industry. [ABSTRACT FROM AUTHOR]

Biodiversity and mitigation banking has become a popular alternative offsetting mechanism, especially for freshwater species and systems. Central to this increase in popularity is the need for sound control mechanisms to ensure offset functionality. Two commonly used mechanisms are monitoring requirements and staggered release of bank credits over time. We used data from 47 banks in the United States, targeting freshwater systems and species. Based on the 47 banks meeting our criteria we showed that control mechanisms generally scale with increased project complexity and that banks release most of their total credit amount within the first 3 years. We further showed that advance credits are common and can increase the potential for credit release without providing tangible ecological benefits. Physical and biological assessment criteria commonly used by banks let us identify three main bank types focusing on connectivity, physical aspects, and habitat and species and their application possibilities and caveats to provide different ecosystem benefits for freshwater species and systems affected by anthropogenic development. [ABSTRACT FROM AUTHOR]

This study examines the relationship between cash flow and financial performance with a sample of 122 American banks covering the period from 2019 to 2022. Panel data analysis is applied in the work. Financial performance is computed as the Return on Assets (ROA) and Return on Equity (ROE). The explanatory variables used are the net cash flow, free cash flow, cash flow from operating activities, cash flow from investing activities, cash flow from financing activities, size of banks, leverage ratio (total liabilities to total assets), liquidity ratio (current assets to current liabilities) and efficiency ratio (total revenue to total assets). The results provide evidence of a negative relationship between financial performance and net cash flow. This is also the case for cash flow from investment and financing activities. On the other hand, the relationship of free cash flow with financial performance is positive. As regards the other explanatory variables, leverage and efficiency are positively related to financial performance [ABSTRACT FROM AUTHOR]