Bundesbank paper finds some banks can improve stability via income diversification


A discussion paper published by the Deutsche Bundesbank on May 6 finds diversification away from interest income has different effects depending on the structure of different banks.

The paper, Does non-interest income make banks more risky?, by Matthias Köhler, examines the share of interest and non-interest income in German banks from 2002 to 2010, to test which banks were the most risky.

Köhler finds that banks with a high interest income share, such as small banks and retail banks, benefit

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