Service provision and bank interest margins.

Summary Given the increasing share of non-interest income, the motivation behind this thesis is to understand how the major changes that took place in the banking industry may have affected banks' intermediation activity. The review of literature shows that the price setting of intermediation activity, the role of risk within this setting and the multi-production of banks have not been considered conjointly. After an empirical survey, we carry out our own test about the determinants of bank margins in Europe. We include fees as an explanatory variable, and find a negative impact of this variable on the margin. Our model, based on a principal-agent framework with adverse selection, underlines two major results: banks subsidise their lending rate as they desire to increase their sale of services, and a strategy to further increase service revenue decreases their incentives to screen firms' project, taking on higher credit risk. Then, our theoretical findings are assessed empirically.