Lorie Zorn

Staff working papers

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Bank publications

Bank of Canada Review articles

May 19, 2011

Central Bank Collateral Policy: Insights from Recent Experience

Bank of Canada Review - Spring 2011 Lorie Zorn, Alejandro García
The collateral policy of central banks played a critical role during the recent financial crisis, as they worked to bolster liquidity and alleviate the funding pressures facing financial institutions. This article examines central bank collateral policy and discusses three areas in which central banks can use their collateral policy to influence financial market practices: promoting greater transparency for securitized products, improving practices related to credit risk, and reducing procyclicality in the management of market risk.
Content Type(s): Publications, Bank of Canada Review articles Topic(s): Financial markets, Financial stability, Payment clearing and settlement systems
September 11, 2009

Bank of Canada Liquidity Actions in Response to the Financial Market Turmoil

Bank of Canada Review - Autumn 2009 Lorie Zorn, Carolyn A. Wilkins, Walter Engert
In response to the financial crisis of 2007-09, the Bank of Canada intervened repeatedly to stabilize the financial system and limit the repercussions of the crisis on the Canadian economy. This article reviews the extraordinary liquidity measures taken by the Bank during this period and the principles that guided the Bank's interventions. A preliminary assessment of the term liquidity facilities provided by the Bank suggests that they were an important source of liquidity support for some financial institutions and, on a broader basis, served to reduce uncertainty among market participants about the availability of liquidity, as well as helping to promote a return to well-functioning money markets.
Content Type(s): Publications, Bank of Canada Review articles Topic(s): Financial institutions, Financial markets, Financial stability
October 13, 2007

Estimating the Cost of Equity for Canadian and U.S. Firms

Bank of Canada Review - Autumn 2007 Lorie Zorn
Financing costs are important for both firms and the economy, affecting investment decisions and, ultimately, economic growth. Despite concern among policy-makers that the cost of equity financing may be higher in Canada than in the United States, empirical evidence supporting this view is mixed. Yet Canadian firms may not undertake as many projects that could potentially enhance growth if the cost of equity financing in Canada is relatively high. The article summarizes research by Jonathan Witmer and Lorie Zorn on the influences on the cost of equity in Canada and the United States, using an updated methodology that controls for firm characteristics and aggregate-level factors. In their sample, the cost of equity was 30–50 basis points higher in Canada over 1988 to 2006 but appears to have dropped in the post-1997 period. The results have policy implications related to such factors as firm size, disclosure, and securities regulation and enforcement.
Content Type(s): Publications, Bank of Canada Review articles Topic(s): Financial markets, International topics

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Financial System Review articles

June 11, 2015

Assessing Vulnerabilities in the Canadian Financial System

Financial System Review - June 2015 Ian Christensen, Gitanjali Kumar, Césaire Meh, Lorie Zorn
The authors present the four common cyclical vulnerabilities that appear in financial systems, providing examples of qualitative and quantitative indicators used to monitor these vulnerabilities across different sectors. They also discuss other inputs to the vulnerability assessment and to the internal process used at the Bank of Canada for identifying, evaluating and communicating vulnerabilities and risks, and highlight some of the key challenges in assessing financial system vulnerabilities and risks.
Content Type(s): Publications, Financial System Review articles Topic(s): Financial stability JEL Code(s): G, G0, G01, G1, G10, G2, G20

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