Dave's ESL Cafe's Student Discussion Forums

[shvetsov2005]

"One noteworthy difference is the relatively low percentage of fee-based income among Chinese banks. As recently as 2003, noninterest income represented about 11 percent of total revenue for the Chinese banking market, compared with roughly 48 perscent for the global banking market."

Can you explain what is "fee-based income" and noninterest income" here?

Alexander.

[CP]

One way that banks make money is by lending money to people and charging interest. The banks use the money deposited by customers, and they pay interest to some of the customers for some of the money, but at a lower rate than they charge for borrowing money. The money they make on loans to others is interest income.

Banks also make money by charging fees for services. Want to buy travelers' checks? There's a service charge. Want a money order? Same. Need to send money to another bank by wire? A charge for that, too. Some checking accounts cost for every check written, and for others, the bank charges a monthly fee to process any number of checks. And so on. Those charges, or fees, are fee-based income.
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[shvetsov2005]

That's a very descriptive, simple but laconic answer!
Alex.