Why Are Canadian Banks More Resilient?

July 1, 2009

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Format: Chicago

Rocco Huang, and Lev Ratnovski. Why Are Canadian Banks More Resilient?, (USA: International Monetary Fund, 2009) accessed November 21, 2024

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.

Subject: Asset and liability management, Banking, Business enterprises, Capital adequacy requirements, Economic sectors, Financial institutions, Financial regulation and supervision, Financial statements, Liquidity, Public financial management (PFM), Stocks

Keywords: A. bank Fundamentals, Australia and New Zealand, Balance sheet liquidity, Bank, Bank capital regulation, Bank performance, Banking Crisis, Business enterprises, Canada, Canadian bank, Capital, Capital adequacy requirements, Capital injection, Early Warning System, Financial Stability, Financial statements, Funding, Liquidity, Price, Stocks, WP

Publication Details

Pages:

19
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2009/152
Stock No:

WPIEA2009152
ISBN:

9781451872996
ISSN:

1018-5941

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