Why Are Canadian Banks More Resilient?

Rocco Huang and Lev Ratnovski ()

No 2009/152, IMF Working Papers from International Monetary Fund

Abstract: This paper explores factors behind Canadian banks' relative resilience in the ongoing credit turmoil. We identify two main causes: 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.

Keywords: WP; bank; capital; price; funding; Banking Crisis; Financial Stability; Early Warning System; Canada; bank capital regulation; A. bank Fundamentals; capital injection; bank performance; balance sheet liquidity; Canadian bank; Financial statements; Stocks; Liquidity; Capital adequacy requirements; Business enterprises; Australia and New Zealand (search for similar items in EconPapers)
Pages: 19
Date: 2009-07-01
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Citations: View citations in EconPapers (117)

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