The Effect of Bank Income Structure on its Profitability and Commercial Efficiency

The thesis describes the recent trend in the banking systems of developed and developing countries, associated with the change in the structure of commercial banks' income, related to the increasing of proportion of non-interest income. Some of the reasons that explain this trend are the gradual reduction in loan margins due to increased competition for customers among banks, globalization of the banking business, as well as technological progress, which allows banks to offer new non-loan products and services to its customers. However, so far there is no clear answer, how the increase in non-interest income impacts the bank's financial indicators - namely, profitability and stability. This paper analyzes the causes of these changes, explores international experience on this issue, as well as presents empirical models, created to evaluate the impact of non-interest income on the financial performance of banks in the Russian Federation.