Why Are Canadian Banks More Resilient?
IMF Working Papers, July 1, 2009
Source details
- Canonical URL
- Why Are Canadian Banks More Resilient?
Other formats
Bibliographic details
- Authors: Rocco Huang, Lev Ratnovski
- Published: July 1, 2009
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451872996.001
Summary findings
- The paper explores factors behind Canadian banks' relative resilience in the ongoing credit turmoil.
- Two main causes are identified:
- 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.
Analysis and evidence
- Multivariate analysis covered 72 largest commercial banks in OECD countries during the turmoil.
- Key explanatory variable highlighted: depository funding ratio (higher share of depository funding versus wholesale funding).
- Regulatory and structural market characteristics in Canada are emphasized as reducing incentives for excessive risk-taking.
Subjects and focus areas
- 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