Nexus of Bank Income Structure and Risk: Evidence from Balkans

Global Business Review. 2021. Vol. online first. P. 1–16.

In this study, we analysed the income structure of the 30 largest banks in seven Balkan countries in the period before, during and after the global economic crisis. Considering that the structure of income primarily consists of interest-bearing and non-interest-bearing income, we analysed whether the crisis has affected the change in the structure of banks’ income in the Balkans. To analyse this, we used panel and quantile regressions models. The study additionally implemented quantile regression for checking the robustness. The results show that there is a more significant correlation between non-interest-bearing and interest-bearing income, while the correlation with net profit is more moderate. According to our results, the interest income grew in the period when reference interest rates fell and when the negative effects of the economic crisis were most pronounced. The banks in the region of the Balkans built their profits more on interest-incomes in the period before and after the economic crisis.

Keywords: Balkans, Crisis, Banks, interest-bearing income, non-interest-bearing income