Why Are Canadian Banks More Resilient?

Author/Editor:

Rocco Huang ; Lev Ratnovski

Publication Date:

July 1, 2009

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper explores factors behind Canadian banks' relative resilience in the ongoing credit turmoil. We identify two main causes: a higher share of depository funding (vs. wholesale funding) in liabilities, and a number of regulatory and structural factors in the Canadian market that reduced banks' incentives to take excessive risks. The robust predictive power of the depository funding ratio is confirmed in a multivariate analysis of the performance of 72 largest commercial banks in OECD countries during the turmoil.

Series:

Working Paper No. 09/152

Subject:

Bank regulations Banking crisis Banking sector Canada Commercial banks Cross country analysis Depositories Economic models Financial stability Monetary policy

English

Publication Date:

July 1, 2009

ISBN/ISSN:

9781451872996/1018-5941

Stock No:

WPIEA2009152

Format:

Paper

Pages:

19

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