## Disintermediation and Monetary Transmission in Canada

_IMF Working Papers, March 1, 2006_

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**Canonical URL:** [Disintermediation and Monetary Transmission in Canada](https://www.imf.org/en/publications/wp/issues/2016/12/31/disintermediation-and-monetary-transmission-in-canada-18950)

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## Bibliographic details
- Authors: Jorge Roldos
- Published: March 1, 2006
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451863444.001

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### Key findings
- VAR models show a clear break in monetary transmission beginning in 1988, after changes in financial regulation initiated the process of financial disintermediation.
- Estimates of the interest rate elasticity of aggregate demand in IS equations increase in the 1990's, suggesting that the systematic component of monetary policy has become more relevant.
- The ratio of direct to indirect finance, a measure of disintermediation, contributes to explain changes in the interest rate elasticity.
- The evidence points to an increased effectiveness of monetary policy associated with a larger use of market-based sources of finance.

### Methodologies used
- Vector autoregression (VAR) models to detect structural breaks in monetary transmission.
- IS-equation estimation of the interest rate elasticity of aggregate demand to assess changes in the sensitivity of demand to policy rates.

### Subjects and keywords
- Subject: Asset prices, Bank credit, Corporate sector, Loans, Vector autoregression
- Keywords: exchange rate, monetary policy, WP

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/disintermediation-and-monetary-transmission-in-canada-18950_