Non-traditional banking: Current state of knowledge and future research directions.

Abstract

The collapse of Silicon Valley Bank and First Republic Bank has raised many concerns over the overall strength of the banking system, one of which is the operational and market risk banks take through their non-traditional banking activities (NTBAs). This paper uses bibliometric citation analysis and content analysis to examine the literature on non-traditional banking activities (NTBA), focusing on its evolution, current influence, and future research directions. The analysis covers 309 articles published between 1986 and 2024 collected from the Web of Science database. The findings reveal two dominant research clusters: studies on the Glass-Steagall Act and universal banking and the post-Gramm–Leach–Bliley Act era. Within the latter cluster, seven sub-clusters are identified: profitability and insolvency risk, systemic risk, efficiency, market valuation, lending behaviour and liquidity creation, monetary policy, and digitalisation and fintech adoption. Despite the lessons learned from the Global Financial Crisis, the shift away from the traditional banking model has significantly increased banks' risk exposure. However, the recent hikes in interest rates to stem inflation may force banks to change their investment strategies. We argue that banks will need to transform in the next decade. This study provides the regulators, practitioners, and academics with an in-depth understanding of the NTBA research field.