Net interest income : theoretical and empirical aspects

Abstract

Banks are increasingly developing alternative sources of income. Net Interest Income however remains the most important revenue source for most Banks, hence it deserves in depth consideration. The objective of this dissertation is to give a better understanding of the factors that have throughout the years allected the growth of this item in the income statement while establishing the content to which Net Interest Income is related to such factors. Various theories related to variables affecting Net Interest Income arc presented. These theories arc then investigated in order to establish whether such relationships exist in reality particularly in the Maltese and in the United States' Banking Industry. Aggregate bank data and macroeconomic data arc compiled and trends are identified. The relationship of such variables is investigated by means of Mathematical tools.