The paper investigates determinants driving the banks to shifts between their interest–based and non interest–based activities under the influence of various monetary regimes and debt policies. Bank sectors of Poland, as low inflationary environment and Ukraine, as high inflation environment, were studied. Our empirical findings suggest that monetary policy regime, risk spreads, different debt loads and magnitudes of inflationary shocks all contribute to changing the ratio of interest to non–interest incomes. Yet, in economy with inflation targeting and lower debt–to–GDP ratio risk spreads, defined as difference between lending rates and relevant government bond yields, are more effective in lowering interest incomes than in more volatile inflationary environment due to risk aversion of banks to new lending. Real deposit rates are barely important factors since both economies are banking–based. Rising proportion of government bonds in bank assets negatively impacts interest incomes in relation to total incomes in a more inflationary and indebted economy, while it increases this proportion in a less indebted economy, which we attribute to stable demand for safe assets in low inflation environment. In the meanwhile, narrowing risk spreads resulting from increases in government borrowing, lead to investment crowd–out and more fee–oriented banking sector.