March 2008 working paper no. 330 Issn 1975-5163 Joon-Ho Hahm

1. Data 
Our Empirical investigations are based upon macroeconomic data as well as 
detailed balance sheet and income statement data of relatively large commercial banks in 
29 OECD countries from 1992 to 2006.
1
The macroeconomic time series of OECD 
countries were obtained from the World Bank’s World Development Indicators and Global 
Insight’s World Overview. The commercial bank accounting data were obtained from the 
BANKSCOPE database. Since detailed information on non-interest income is missing for 
many smaller banks and non-interest income expansion is less important for smaller banks 
as discussed above in the literature review, our analysis focuses on relatively large 
commercial banks whose average asset size is 5 billion USD or more during the sample 
period. We included 662 banks in our sample.
2
The sample mean values of major bank statistics are summarized in Table 1. Note 
that, during the sample period of 1992-2006, the average bank asset size is relatively high 
1
The 29 OECD countries included in the analysis and their respective country codes are: Australia (AU), 
Austria (AT), Belgium (BE), Canada (CA), Czech Republic (CZ), Denmark (DK), Finland (FI), France 
(FR), Germany (DE), Greece (GR), Hungary (HU), Iceland (IS), Ireland (IE), Italy (IT), Japan (JP), Korea 
(KR), Luxembourg (LU), Mexico (MX), the Netherlands (NL), New Zealand (NZ), Norway (NO), Poland 
(PL), Portugal (PT), Spain (ES), Sweden (SE), Switzerland (CH), Turkey (TR), United Kingdom (UK), and 
United States (US). 
2
We also excluded outliers with extreme observations. For instance, banks with return on asset, return on 
equity, or cost income ratios greater than 10,000, and banks with negative net interest revenues were 
eliminated from the sample. 

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in countries with highly concentrated banking industries such as New Zealand and 
Belgium. Simple equity capital to asset ratio is relatively high in Poland and Turkey, but 
these countries also showed a high impaired loan ratio. The average return on asset (ROA) 
was negative in Japan during the sample period, and Korea also showed a relatively low 
ROA reflecting the negative consequences of 1997 financial crisis. Net interest margin is 
relatively high in Turkey, Hungary and Mexico, while cost income ratio is relatively low 
in off-shore financial center countries such as Luxembourg, Iceland, and Ireland. 
The last column in Table 1 shows the average non-interest income ratio, which is 
the focus of our analyses. We computed the non-interest income ratio in net terms and as a 
share of net operating revenue. Note that net operating revenue is the sum of net interest 
revenue and net non-interest income. Net interest revenue is interest income minus interest 
expense, and net non-interest income includes net commission revenue, net fee income, 
net trading income, and other operating income. 
Figures 1 and 2 show average return on asset and non-interest income ratio across 
countries for three distinct sub-periods. Note that, in the post-crisis 2002-06 sub-period, 
the Czech Republic, Greece, Korea and Turkey show a remarkable recovery in bank 
profitability from the previous negative figures. Countries such as Austria, Germany, 
Luxembourg and the US show relatively stable bank profitability across sub-periods, 
while countries such as Belgium, Spain, Hungary, Mexico and New Zealand exhibit a 
strong growth trend in bank profitability. 
As for the non-interest income ratio, it is interesting to note that, not only does the 

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ratio vary widely across countries, but it also fluctuates across different sub-periods within 
a given country. While countries with a more established financial system such as Canada, 
Switzerland, France and UK exhibit a relatively high non-interest income ratio on average, 
relatively small and emerging market countries like Spain, Finland, Iceland, Luxembourg, 
and Poland show a recent rapid growth in their non-interest income ratios. Note also that 
Canada, the Czech Republic, Spain, Finland, France, Italy, Luxembourg, Sweden and the 
US exhibit a consistently rising non-interest income ratio over the sub-periods. 
Figure 3 compares the composition of net operating revenue in terms of interest 
income versus non-interest income during the recent sub-period of 2002-06. Note that 
Korea belongs to the country group that exhibits a relatively low non-interest income ratio 
along with Germany, Denmark, Greece, Ireland, Japan, Mexico, Norway, and Portugal.