Commercial banks' major source of income remains to be interest income. However interest is driven by the amount of loans advanced. High amounts of credit contributes to high non performing loans levels. Bank size and number of account holders too contributes to their financial health. What then is the Impact of other sources of income other than interest income on the performance of commercial banks?
Personal Banking.
This avails more money to give out for loans, however, also more money would reduce the prices (interests) on loans. So the bank would have to be rational and limit the loans to a point where it can maximize the income.
Income.
More incomes increase the level of savings if at all the interests earned on deposits are high. However more flow of savings would make the interest rates low if the bank didn't become greedy.
The banks' other sources of income are extremely important, firstly because they allow not only to provide guarantees for certain operations in which the bank is more exposed to its own credit risk, but also to diversify the banks' sources of income. An example of this is the income that the bank can obtain through investments it makes in real estate.
So then can we say that an analysis into the impact of these other sources is an important topic. This will inform commercial banks that are struggling of the importance of diversifying their sources of income, and by what significance.
I agree however, different economic situations would require kind of analysis on different magnitudes.
So then does it mean a case study would be more appropriate?@Sengonzi K Christopher
Exactly, one is needed starting from pre-economic shock such as covid19 pandemic through, to present day.