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The evolution of bank fees as a source of income: trends and new business models – evidence from Italy

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  • Massimiliano Affinito

    (Bank of Italy)

  • Matteo D'Amato

    (Bank of Italy)

  • Raffaele Santioni

    (Bank of Italy)

Abstract

The analysis of bank fees combines three research areas: the soundness of individual financial institutions, overall system stability, and customer protection. In fact, high fees could entail both risks to the sustainability of business models and frictions in the fairness of customer relationships. This paper describes the evolution of bank fees in Italy between 2008 and 2021, distinguishing between fee types, bank categories, and time spans, and it presents an analysis of the bank characteristics most strongly associated with the relevance of fees. The paper shows that the growth in fee income observed since the global financial crisis involved all categories of banks, but the share of gross income generated by fees varies broadly across banks. At the bank level, higher fees are associated with higher operating expenses and lower capital levels. Our estimates suggest that there is no systematic relationship between greater recourse to fees as a source of income and bank business models that are more focused on household lending.

Suggested Citation

  • Massimiliano Affinito & Matteo D'Amato & Raffaele Santioni, 2023. "The evolution of bank fees as a source of income: trends and new business models – evidence from Italy," Questioni di Economia e Finanza (Occasional Papers) 777, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_777_23
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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2023-0777/QEF_777_23.pdf
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    Cited by:

    1. Massimiliano Affinito & Federica Sabbi & Raffaele Santioni & Francesco Santorelli, 2024. "Types of consumer credit and bank distribution channels: insights from Italy," Questioni di Economia e Finanza (Occasional Papers) 879, Bank of Italy, Economic Research and International Relations Area.

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    More about this item

    Keywords

    fee income; customer protection; bank business model;
    All these keywords.

    JEL classification:

    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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