chapter  17
20 Pages

■ Surging OBS Activities and Bank Revenue Volatility: How to Explain the Declining Appeal of Bank Stocks in Canada

In this chapter, we provide new complementary evidence about the detrimental effects of the increase in the relative importance of noninterest income on the performance of the Canadian banking sector. Our contribution is to demonstrate that the surging volatility of bank revenues has given rise to a risk premium as measured with various accounting returns, as was suggested, but not tested, by DeYoung and Roland (2001).