Bank loan portfolios and the Canadian monetary transmission mechanism

Wouter J. Den Haan, Steven W. Sumner and Guy M. Yamashiro
Authors registered in the RePEc Author Service: Wouter Denhaan ()

Canadian Journal of Economics, 2009, vol. 42, issue 3, 1150-1175

Abstract: Following a monetary tightening, bank loans to consumers decrease. This is true for both mortgage and non-mortgage loans, and it is true for a tightening by the Bank of Canada that is, and is not, a response to a tightening by the Federal Reserve System. In contrast, business loans increase following a monetary tightening. The `perverse' response of business loans cannot be explained by an increase in the demand for funds due to a reduction in real activity. These results are consistent with a change in bank portfolio behaviour in favour of business loans in response to a monetary tightening.

JEL-codes: E40 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (12)

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