search query: @indexterm PRODUCT MIX / total: 47
reference: 5 / 47
| Author: | DeYoung, R. Roland, K. P. |
| Title: | Product Mix and Earnings Volatility at Commercial Banks: Evidence from a Degree of Total Leverage Model |
| Journal: | Journal of Financial Intermediation
2001 : JAN, VOL. 10:1, p. 54-84 |
| Index terms: | PRODUCT MIX EARNINGS VOLATILITY COMMERCIAL BANKS |
| Language: | eng |
| Abstract: | The authors construct a degree-of-total-leverage framework to test whether and how shifts in product mix affect earnings volatility at 472 U.S. commercial banks between 1988 and 1995. The authors' framework, which accounts for cost and revenue synergies not captured in most previous studies, conceptually links earnings volatility to revenue volatility, expense fixity, and product mix. The authors find that replacing traditional lending activities with fee-based activities-an ongoing trend that may be strengthened by recent financial modernization-is associated with both higher revenue volatility and higher total leverage, which in this framework implies higher earnings volatility. |
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