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166 Results

News-Driven International Credit Cycles

Staff Working Paper 2021-66 Galip Kemal Ozhan
This paper examines the implications of positive news about future asset values that turn out to be incorrect at a later date in an open economy model with banking. The model captures the patterns of bank credit and current account dynamics in Spain between 2000 and 2010. The model finds that the use of unconventional policies leads to a milder bust.

Monetary Policy Spillover to Small Open Economies: Is the Transmission Different under Low Interest Rates?

Does the transmission of monetary policy change when interest rates are low or negative? We shed light on this question by analyzing the international bank lending channels of monetary policy using regulatory data on banks from four small open economies: Canada, Chile, the Czech Republic and Norway.

The Countercyclical Capital Buffer and International Bank Lending: Evidence from Canada

Staff Working Paper 2021-61 David Xiao Chen, Christian Friedrich
We examine the impact of the CCyB on foreign lending activities of Canadian banks. We show that the announcement of a tightening in another country’s CCyB leads to a decrease in the growth rate of cross-border lending between Canadian banks and borrowers in that other country.

A Q-Theory of Banks

Using stock market data on banks, we show that the book value of loans recognizes losses with a delay. This delayed accounting is important for regulation because the requirements regulators impose are based on book values.

Can the characteristics of new mortgages predict borrowers’ financial stress? Insights from the 2014 oil price decline

Staff Analytical Note 2021-22 Olga Bilyk, Ken Chow, Yang Xu
We study the relationship between characteristics of new mortgages and borrowers’ financial stress in Canada’s energy-intensive regions following the 2014 collapse in oil prices. We find that borrowers with limited home equity were more likely to have difficulty repaying debt.

Stressed but not Helpless: Strategic Behaviour of Banks Under Adverse Market Conditions

Staff Working Paper 2021-35 Grzegorz Halaj, Sofia Priazhkina
Our stress-testing tool considers banks under stress that can strategically manage their balance sheets. Using confidential Canadian supervisory data, we assess whether bank behaviour to maximize shareholder value can amplify a hypothetical stress scenario.

Bank Runs, Bank Competition and Opacity

Staff Working Paper 2021-30 Toni Ahnert, David Martinez-Miera
How is the stability of the financial sector affected by competition in the deposit market and by decisions banks make about transparency? We find that policies that aim to increase bank competition lead to higher bank deposit rates, increasing both withdrawal incentives and instability.

Consumer Cash Withdrawal Behaviour: Branch Networks and Online Financial Innovation

Staff Working Paper 2021-28 Heng Chen, Matthew Strathearn, Marcel Voia
The physical network of bank branches is important in how consumers manage their cash holdings. This paper estimates how consumer withdrawal behaviour responds to the distance they must travel to their branch.
Content Type(s): Staff research, Staff working papers Topic(s): Bank notes, Digital currencies and fintech JEL Code(s): G, G2, G21, R, R2, R22

An Exploration of First Nations Reserves and Access to Cash

Staff Discussion Paper 2021-8 Heng Chen, Walter Engert, Kim Huynh, Daneal O’Habib
Adequate cash distribution is one the Bank of Canada’s core interests. Canadians’ ability to access cash influences the Bank’s thinking on issuing a central bank digital currency. We provide a perspective on these issues by exploring access of First Nations reserves to cash.
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