Household and business credit

• Household balance sheets and mortgage payment shocks

  Staff analytical note 2025-23 Thomas Michael Pugh, Saarah Sheikh, Taylor Webley

  Household savings in Canada have increased significantly since 2019, especially among homeowners without a mortgage. We assess how savings buffers can mitigate households’ financial risk in relation to asset repricing, mortgage payment renewal and unemployment.

  Content Type(s): Staff research, Staff analytical notes JEL Code(s): D, D3, D31, E, E2, E21, G, G5, G51 Research Theme(s): Financial system, Financial stability and systemic risk, Household and business credit

• Credit Conditions, Inflation, and Unemployment

  Staff working paper 2025-26 Chao Gu, Janet Hua Jiang, Liang Wang

  We identify two channels that affect the relationship between inflation and unemployment. First, inflation lowers wages because unemployed suffer more from inflation than employed, generating a positive relationship. Second, inflation increases firms’ financing costs, generating a negative relationship. Improvements in firm financing conditions can induce the relationship to switch signs.

  Content Type(s): Staff research, Staff working papers JEL Code(s): E, E2, E24, E3, E31, E4, E44, E5, E51 Research Theme(s): Financial system, Household and business credit, Models and tools, Economic models, Monetary policy, Inflation dynamics and pressures, Real economy and forecasting

• Firm Heterogeneity and Adverse Selection in External Finance: Micro Evidence and Macro Implications

  Staff working paper 2025-20 Xing Guo, Pablo Ottonello, Thomas Winberry, Toni Whited

  We develop a heterogeneous firm macro model with private information and quantify the aggregate relevance of asymmetric information. We find that a spike in private information account for 40% of the decline in aggregate investment during the 2007-2009 financial crisis and made monetary stimulus significantly less effective.

  Content Type(s): Staff research, Staff working papers JEL Code(s): D, D8, D82, E, E2, E22, E3, E32, E5, E52, G, G3, G30 Research Theme(s): Financial system, Financial institutions and intermediation, Household and business credit, Models and tools, Economic models, Monetary policy, Monetary policy framework and transmission

• How will mortgage payments change at renewal? An updated analysis

  Staff analytical note 2025-21 Claudia Godbout, Adam Su, Yang Xu

  We update an assessment of potential changes in payments that mortgage holders could face at renewal in 2025 and 2026. We use an enhanced dataset (RESL2) that provides a more accurate starting point for mortgage balances.

  Content Type(s): Staff research, Staff analytical notes JEL Code(s): D, D1, D12, D14, G, G2, G21, G28, R, R2, R20 Research Theme(s): Financial system, Financial stability and systemic risk, Household and business credit

• Examining the Links Between Firm Performance and Insolvency

  Staff discussion paper 2025-10 Dylan Hogg, Hossein Hosseini Jebeli

  Assessing insolvency dynamics is essential for evaluating the financial health of non-financial corporations and mitigating macroeconomic and financial stability risks. This study leverages a newly created Statistics Canada dataset linking insolvency records with firm-level financial data to develop a robust framework for monitoring insolvency risk

  Content Type(s): Staff research, Staff discussion papers JEL Code(s): D, D2, D22, G, G3, G33, L, L2, L20 Research Theme(s): Financial system, Financial stability and systemic risk, Household and business credit, Models and tools, Econometric, statistical and computational methods

• The Prudential Toolkit with Shadow Banking

  Staff working paper 2025-9 Kinda Hachem, Martin Kuncl

  Can regulators keep pace with banks’ creative regulatory workarounds? Our analysis unpacks the trade-offs between fixed regulations and crisis-triggered rules, showing that the latter are especially prone to circumvention—and can trigger larger, costlier bailouts.

  Content Type(s): Staff research, Staff working papers JEL Code(s): D, D6, D62, E, E6, E61, G, G0, G01, G2, G21, G28 Research Theme(s): Financial system, Financial institutions and intermediation, Financial stability and systemic risk, Financial system regulation and oversight, Household and business credit

• High-Cost Consumer Credit: Desperation, Temptation and Default

  Staff working paper 2025-6 Joaquín Saldain

  I study the welfare consequences of regulations on high-cost consumer credit in the United States and find that borrowing limits have distributional impacts on households with self-control issues.

  Content Type(s): Staff research, Staff working papers JEL Code(s): E, E2, E7, E71, G, G5, G51 Research Theme(s): Financial system, Financial stability and systemic risk, Household and business credit

• Using new loan data to better understand mortgage holders

  Staff analytical note 2025-1 Odae Al Aboud, Saarah Sheikh, Adam Su, Yang Xu

  The Bank of Canada is using an enhanced dataset that tracks the stock of outstanding mortgages and home equity lines of credit held by federally regulated lenders. This paper highlights some of the new details in the dataset and how they impact the Bank’s understanding of the mortgage market.

  Content Type(s): Staff research, Staff analytical notes JEL Code(s): D, D1, D12, D14, G, G2, G21, G28 Research Theme(s): Financial system, Financial stability and systemic risk, Household and business credit

• Interaction of Macroprudential and Monetary Policies: Practice Ahead of Theory

  Staff discussion paper 2024-18 Thibaut Duprey, Yaz Terajima, Jing Yang

  We draw on the Canadian experience to examine how monetary and macroprudential policies interact and possibly complement each other in achieving their respective price and financial stability objectives.

  Content Type(s): Staff research, Staff discussion papers JEL Code(s): E, E3, E37, E5, E52, E58, E6, E61, G, G0, G01, G2, G21, G28 Research Theme(s): Financial system, Financial stability and systemic risk, Household and business credit, Monetary policy, Monetary policy framework and transmission

• Mortgage stress tests and household financial resilience under monetary policy tightening

  Staff analytical note 2024-25 Jonathan Hartley, Nuno Paixão

  This note analyzes mortgage stress tests, a macroprudential tool. We find that when mortgage stress tests are applied to all mortgage purchase originations, they improve credit quality and reduce credit and house price growth. They also improve the resilience of borrowers to financial shocks, such as the large increase in interest rates during 2022–23.

  Content Type(s): Staff research, Staff analytical notes JEL Code(s): E, E5, E52, G, G2, G21, G28, G5, G50, G51 Research Theme(s): Financial system, Financial stability and systemic risk, Household and business credit, Monetary policy, Monetary policy tools and implementation