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Estimating the volume of payments-driven revenues

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  • Tara N. Rice
  • Kristin D. Stanton

Abstract

This paper estimates the volume of payments-driven revenues at the top 40 domestic BHCs and builds on the statistical summaries that Radecki (1999) compiles from the top 25 BHCs in 1996. We replicate Radecki's 1996 results, but find that they overstate payments-driven revenues by including entire revenue sources that are not entirely payments-driven. We offer a modified definition of payments-driven revenue and re-estimate BHC payments-driven revenue for the top 40 BHCs. Our modified estimation method suggests that on average 16 percent of the operating revenue of the top 40 BHCs is derived from payments-related activities.

Suggested Citation

  • Tara N. Rice & Kristin D. Stanton, 2003. "Estimating the volume of payments-driven revenues," Emerging Issues, Federal Reserve Bank of Chicago.
    • Handle: RePEc:fip:fedhei:y:2003:n:eps-2003-1c
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    References listed on IDEAS

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    1. Sujit Chakravorti & Emery Kobor, 2003. "Why invest in payment innovations?," Emerging Issues, Federal Reserve Bank of Chicago, issue Jun.
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    Cited by:

    1. Grodecka-Messi, Anna & Zhang, Xin, 2023. "Private bank money vs central bank money: A historical lesson for CBDC introduction," Journal of Economic Dynamics and Control, Elsevier, vol. 154(C).
    2. Sujit Chakravorti & Emery Kobor, 2003. "Why invest in payment innovations?," Emerging Issues, Federal Reserve Bank of Chicago, issue Jun.
    3. Barnes, Michelle L. & Lopez, Jose A., 2006. "Alternative measures of the Federal Reserve Banks' cost of equity capital," Journal of Banking & Finance, Elsevier, vol. 30(6), pages 1687-1711, June.
    4. David Bounie & Abel François, 2006. "Les déterminants de la détention et de l’usage des instruments de paiement : éléments théoriques et empiriques," Revue d'Économie Financière, Programme National Persée, vol. 83(2), pages 159-176.
    5. Catharine Lemieux, 2003. "Retail payments innovations and the banking industry," Emerging Issues, Federal Reserve Bank of Chicago.
    6. Catharine Lemieux, 2003. "Network vulnerabilities and risks in the retail payment system," Emerging Issues, Federal Reserve Bank of Chicago.
    7. Humphrey, David, 2009. "Payment scale economies, competition, and pricing," Working Paper Series 1136, European Central Bank.
    8. Iftekhar Hasan & Heiko Schmiedel & Liang Song, 2012. "Returns to Retail Banking and Payments," Journal of Financial Services Research, Springer;Western Finance Association, vol. 41(3), pages 163-195, June.
    9. Paul E. Kellogg, 2003. "Evolving operational risk management for retail payments," Emerging Issues, Federal Reserve Bank of Chicago.
    10. Tara N. Rice, 2003. "The importance of payments-driven revenues to franchise value and in estimating bank performance," Emerging Issues, Federal Reserve Bank of Chicago.

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    More about this item

    Keywords

    Bank holding companies; Payment systems;

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