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Why Are Canadian Banks More Resilient?

Rocco Huang and Lev Ratnovski ()

No 09/152, 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: Financial stability; Economic models; Banking crisis; Banking sector; Canada; Bank regulations; Depositories; Commercial banks; Cross country analysis; Monetary policy; Early Warning System, capital injection, banking, bank performance, bank of canada, (search for similar items in EconPapers)
Pages: 19
Date: 2009-07-01
New Economics Papers: this item is included in nep-ban and nep-reg
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Handle: RePEc:imf:imfwpa:09/152