Weak instruments in estimating business cycle effects on banks' interest income

This article explores the link between the real business cycle and core bank earnings. Using bank-level data and an estimation technique which corrects for weak instruments, evidence confirms that pre-provision Net Interest Income (NII) is determined by the term structure of interest rates rather than output fluctuations. Output growth is only found to be significant when Loan-Loss Provisions (LLP) are taken into account.

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Year of publication:	2012
Authors:	Hahn, Moritz ; O'Brien, Edward J.
Published in:	Applied Economics Letters. - Taylor & Francis Journals, ISSN 1350-4851. - Vol. 19.2012, 14, p. 1417-1420
Publisher:	Taylor & Francis Journals

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Extent:	text/html
Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010548708