Nontraditional Revenue Research Articles

Bank Holding Company Lobbying Activity upon Regulation and Its Impact upon Non-Traditional Revenue

ABSTRACT Bank holding companies exert influence at every step of the legislative and regulatory processes. In our article, we ask if banks frequently comment upon proposed financial rulings with the goal of favorable regulatory change. We explore whether bank lobbying leads to having their opinions worded into the final form of the regulation. By making use of an original collection of political and financial quarterly panel data, we find that banks use multiple mechanisms of influence while lobbying regulatory agencies. This is important since banks lobby to preserve gains in non-traditional revenues.

The impact of the Fourth Anti-Money Laundering Directive on the valuation of EU banks

Anti-money laundering regulations have costs and benefits for banks. To better understand how these regulations affect banks, we study the valuation effects of the Fourth Anti-Money Laundering Directive (4AMLD) on a sample of European banks. First, using eight significant 4AMLD-related events between the initial announcement (February 5, 2013) and the final enactment (June 26, 2015), we show that the 4AMLD had a positive valuation effect on European banks and helped reduce their systematic risk. Then, using a cross-sectional model, we find that the positive valuation effect was higher for riskier, larger, and more profitable banks with more non-traditional revenue streams, as well as banks operating in rich countries, countries with less effective corporate governance, and countries with higher perception of corruption. These findings provide a better understanding of how anti-money laundering regulations affect banks in order to assist regulators in shaping future policies, as well as bank managers and investors in making better financial and investment decisions.

What Determines Banks’ Profitability? Evidence from Emerging Markets—the Case of the UAE Banking Sector

The primary objective of this study is to examine the variables that impact the profitability of UAE banks. The current study provides evidence of important bank-specific, macroeconomic, and industry-specific variables that have affected UAE banks’ profitability by analyzing balanced panel data for 2006 to 2013. Both Islamic and non-Islamic, domestic commercial banks are considered for the purposes of this study. This paper puts into relief the determinants of the profitability of the domestic commercial banking sector of the UAE. The sample comprises 19 UAE domestic banks. The paper examines internal variables (company-level indicators), which include size, liquidity, and capital adequacy, as well as external variables, which include macroeconomic and industry-specific variables. Panel data regression analysis is used for the analysis. Based on the empirical analysis, the cost efficiency, nontraditional revenue sources, and high asset quality are the most significant bank-specific variables, and bank managers can use them to make future policy decisions. The GDP, a macroeconomic variable, is found to be relevant to the return on assets and return on equity. The model generated in the study can explain a greater than 75% change in the total variance of various measures of profitability. This paper adds to the body of knowledge by empirically highlighting the most recent and extensive panel data for the entire domestic banking sector of the UAE, undoubtedly one of the most important banking sectors in the Middle East. The paper uses a range of independent variables for the internal, macroeconomic, and industry-specific variables.

Banks Non-Interest Income and Global Financial Stability

Depositary institutions over the last 15 years have increased the share of non-traditional revenue in total income.While the change in business models is a global phenomenon, it is more pronounced in countries such as the U.S., France and the U.K. In this study, we examine whether market structure can help explain the cross-country variation in the diversification activities that bank choose to pursue. The UK Independent Commission of Banking raised issues related to “ring fencing retail banking from investment banking. The EU’s Liikanen Review and the Dodd-Frank Act in the US proposed policies which may limit trading and proprietary activities of large banks. It is important to understand the motivation behind these choices because non-traditional banking activities have shouldered a large part of the blame for the 2007-2009 financial crisis, and now face the brunt of regulatory efforts. Using a sample of large banks across 38 countries this paper examines how the concentration of the banking system impacts the choice of business activities and consequently the stability of banks. We show that banks in less concentrated banking systems ( such as in the US and Japan) have higher levels of non-traditional business activities with higher shareholder returns, but at a cost of increased systemic risk. In contrast, the non-traditional business activities in highly concentrated banking systems help reduce the volatility of profits and also increase banks stability. Unlike previous research we show that there is not always a one-to-one relationship between non-traditional business activities and global banks stability

Municipalities and the Institutionalization of Market-Based Governance: Nested Holons within the Institutional Environment of the State

Local governments walk a fine line between the traditional values of financial stewardship and accountability and those related to entrepreneurialism and profitability. Recent decades have seen an increase in the adoption of contracting-out, the implementation of service fees, the development of public authorities, and other non-traditional revenue strategies that are often referred to as market-based governance policies. Although these non-traditional practices have not been widely discussed in relation to one another, they are all underscored by a spirit of business-like efficiency, responsiveness, and cost-saving that has traditionally been associated with the private sector. This research empirically assesses the adoption of market based governance policies and hypothesizes that policymakers are more likely to adopt these policies than the politically charged alternative of tax increases. The adoption decision is mediated by the institutional environment of both state and local fiscal conditions, stakeholder influences and administrative capacities. A multilevel ordered logit is used to determine which factors influence the adoption of the several policy options.

Profit efficiency in U.S. BHCs: Effects of increasing non-traditional revenue sources

Abstract Using information multiple times across revenue streams, BHCs may increase efficiency due to economies of scope. Our main contribution is to be the first to examine noninterest income after passage of the Gramm-Leach-Bliley Act, when additional opportunities to increase noninterest income arise. We examine profit efficiency and its relationship to noninterest income for BHCs using stochastic frontier analysis and multivariate analysis on BHC data from 2003 to 2006. Contrary to our hypothesis, the results indicate multi-noninterest income types are associated with decreased profit efficiency. These results are robust using the Efficiency Ratio as our measure and are particularly strong for small BHCs.

Teaching Revenue Management at the Cornell University School of Hotel Administration

The Cornell University School of Hotel Administration was one of the first in the world to offer a university course in revenue management (starting in 1994) and currently offers five courses related to revenue management: Yield Management, Restaurant Revenue Management, Managing Hospitality Distribution Strategies, Hospitality Pricing and Analysis, and Nontraditional Revenue Management. In addition, the school offers undergraduate and graduate concentrations and executive education courses in revenue management. In recent years, about 10%–15% of our graduates have obtained jobs in revenue management and distribution. In the following paper we discuss the evolution of the teaching of revenue management at Cornell providing descriptions of the courses we teach as well as insight into how this content may be delivered at other institutions.

Sales Promotions as Nontraditional Revenue

The broadcast industry has experienced unprecedented change and growth within the last decade. Mergers, acquisitions, and federal law relaxations and restrictions have all changed the landscape for radio and television stations. One result is greater pressure being placed on the advertising sales departments at broadcast entities to meet larger bottom lines and greater investor expectations. However, traditional advertising revenue has been either stagnant or declining in many markets. Accordingly, television and radio stations have increasingly turned to other sources of income referred to as nontraditional revenue (NTR). Typically, sources of NTR have included cause-related marketing, event sponsorship and internet-based couponing and sweepstakes. Accordingly, this study, based on a survey of industry professionals, reveals the local broadcast television and radio industries' present and future levels of activity in pursuing various NTR promotional areas and how the NTR function is managed from an organizational point of view within the station.

Collegiate Athletics and the Unrelated Business Income Tax

In recent years, many university athletic programs have turned to program and scoreboard advertisements, corporate sponsorships, and other nontraditional sources of revenue to supplement their operating budgets. As confirmed by several high-profile court cases, these nontraditional revenue sources can be subject to federal unrelated business income tax—-a consequence often overlooked by athletic administrators and those involved in sport management programs. This article discusses the unrelated business income tax and its impact on collegiate athletic programs. Court cases and Internal Revenue Service pronouncements are reviewed, where applicable. Compliance and planning issues are also briefly addressed.

Medicaid and health reform: the case of New York.

New York State has the largest, most expensive state Medicaid program in the country. Thus, an examination of its Medicaid program can offer valuable lessons for other states that are considering reform of their health systems, as well as for reform at a nationwide level. Much recent growth in Medicaid in New York stems from shifting state-funded human service programs onto Medicaid and shifting the state's share of Medicaid onto nontraditional revenue sources. In contrast to other states, in which Medicaid is an unpopular program, New York's Medicaid provider constituency is large and diverse, and its clientele is relatively white and middle class. These two constituencies have made Medicaid harder to cut than in other states, in which Medicaid recipients lack political and economic clout. Current versions of national health reform will have little effect on Medicaid spending in New York, since they address neither spending on the elderly nor the "Medicaiding" of programs and revenue sources.