The Macrodynamics of Operating Income in the Norwegian Banking Sector

The IUP Journal of Bank Management, Vol. XI, No. 1, February 2012, pp. 7-29

Posted: 22 Sep 2012

See all articles by Henrik Andersen

Henrik Andersen

Central Bank of Norway

Sigbjørn Atle Berg

affiliation not provided to SSRN

Eilev Jansen

Statistics Norway

Date Written: September 21, 2012

Abstract

The banking literature contains only a handful of studies of how bank revenues vary over the business cycle, and nearly all of these studies look exclusively on the net interest margin. The general conclusion has been that the margin tends to increase during recessions and decrease during booms. In this paper, we study the effect of macroeconomic variables on the operating income in the Norwegian banking sector. We contribute to the existing literature by looking at how net interest income as well as fee income varies over the cycle in an error correction framework, which allows us to identify both short-term and long-term relationships. Our paper also differs from most previous studies by taking into account the volume effect as well as the price effect of the business cycle.

Suggested Citation

Andersen, Henrik and Berg, Sigbjørn Atle and Jansen, Eilev, The Macrodynamics of Operating Income in the Norwegian Banking Sector (September 21, 2012). The IUP Journal of Bank Management, Vol. XI, No. 1, February 2012, pp. 7-29, Available at SSRN: https://ssrn.com/abstract=2150066

Henrik Andersen (Contact Author)

Central Bank of Norway ( email )

P.O. Box 1179
Oslo, N-0107
Norway

Sigbjørn Atle Berg

affiliation not provided to SSRN ( email )

Eilev Jansen

Statistics Norway ( email )

N-0033 Oslo
Norway

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