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Shock Transmission Through International Banks: Canada

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In this paper, we investigate how liquidity conditions in Canada may affect domestic and/or foreign lending of globally active banks and whether this transmission is influenced by individual bank characteristics. We find that Canadian banks expanded their foreign lending during the recent financial crisis, often through acquisitions of foreign banks. We also find evidence that internal capital markets play a role in the lending activities of globally active Canadian banks during times of heightened liquidity risk.

Content Type(s): Staff research, Technical reports
JEL Code(s): E, E4, E44, F, F3, F36, G, G2, G21, G3, G32