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As long as the bank gains: expanding the retail distribution activity

Author

Listed:
  • Danilo Liberati

    (Bank of Italy)

  • Francesco Vercelli

    (Bank of Italy)

Abstract

We investigate the retail distribution of financial products by the Italian banking system between 2010 and 2017. We focus on mutual fund shares, insurance contracts and individually managed portfolios, analysing the characteristics of the banks that distribute these instruments the most and the contribution of each product to bank profitability. We find that banks with larger amounts of bad loans relative to equity distribute more asset management instruments, an activity that does not absorb equity. When liquidity constraints are less binding, banks that are financed more through deposits increase their distribution activity. Moreover, banks with stronger lending specialization are less involved in distributing financial products. Finally, fees from the distribution of individually managed portfolios contribute to bank profitability more than those from the distribution of mutual fund shares.

Suggested Citation

  • Danilo Liberati & Francesco Vercelli, 2019. "As long as the bank gains: expanding the retail distribution activity," Questioni di Economia e Finanza (Occasional Papers) 510, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_510_19
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Banks; Distribution fees; Non-interest income;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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