Essays on Financial Stability Technical Report No. 95 John Chant, Alexandra Lai, Mark Illing, Fred Daniel The four essays published here provide a useful overview for anyone interested in understanding the issues and policy environment surrounding financial system stability. Content Type(s): Staff research, Technical reports Research Topic(s): Financial institutions, Financial markets JEL Code(s): G, G2, G28
June 8, 2017 Financial System Review - June 2017 This issue of the Financial System Review reflects the Bank’s judgment that household indebtedness and housing market imbalances–the most important vulnerabilities for the Canadian financial system–have moved higher over the past six months. However, the financial system remains resilient, and macroeconomic conditions continue to improve. Other vulnerabilities discussed in this FSR are fragile fixed-income market liquidity and the capacity of an interconnected financial system to mitigate cyber threats. Content Type(s): Publications, Financial Stability Report
Who Pays? CCP Resource Provision in the Post-Pittsburgh World Staff Discussion Paper 2017-17 Jorge Cruz Lopez, Mark Manning At the Pittsburgh Summit in 2009, G20 countries announced their commitment to clear all standardized over-the-counter (OTC) derivatives through central counterparties (CCPs). Since then, CCPs have become increasingly important and there has been an extensive program of regulatory enhancements to both them and OTC derivatives markets. Content Type(s): Staff research, Staff discussion papers Research Topic(s): Financial markets, Financial stability, Financial system regulation and policies JEL Code(s): G, G0, G01, G2, G28
Monetary Policy, Credit Constraints and SME Employment Staff Working Paper 2022-49 Julien Champagne, Émilien Gouin-Bonenfant We revisit an old question: how do financial constraints affect the transmission of monetary policy to the real economy? To answer this question, we propose a simple empirical strategy that combines firm-level employment and balance sheet data, identified monetary policy shocks and survey data on financing activities. Content Type(s): Staff research, Staff working papers Research Topic(s): Credit and credit aggregates, Econometric and statistical methods, Firm dynamics, Labour markets, Monetary policy JEL Code(s): E, E2, E3, E4, E43, E5, E52, G, G3
Extreme Weather and Low-Income Household Finance: Evidence from Payday Loans Staff Working Paper 2024-1 Shihan Xie, Victoria Wenxin Xie, Xu Zhang This paper explores the impact of extreme weather exposures on the financial outcomes of low-income households. Our findings highlight the heightened financial vulnerability of low-income households to environmental shocks and underscore the need for targeted policies. Content Type(s): Staff research, Staff working papers Research Topic(s): Climate change, Credit and credit aggregates JEL Code(s): G, G5, Q, Q5, Q54
Why Do Shoppers Use Cash? Evidence from Shopping Diary Data Staff Working Paper 2012-24 Naoki Wakamori, Angelika Welte Recent studies find that cash remains a dominant payment choice for small-value transactions despite the prevalence of alternative means of payment such as debit and credit cards. For policy makers an important question is whether consumers truly prefer using cash or merchants restrict card usage. Content Type(s): Staff research, Staff working papers Research Topic(s): Bank notes, Econometric and statistical methods, Financial services JEL Code(s): C, C2, D, D1, G, G2
The Share of Systematic Variations in the Canadian Dollar—Part II Staff Analytical Note 2017-1 Jean-Sébastien Fontaine, Guillaume Nolin This analytical note examines how much of the systematic variation in the Canadian dollar is attributable to its sensitivity to commodity prices. We introduce a new “oil” portfolio that captures systematic variations when the exchange rates of commodity exporters and commodity importers move in opposite directions. Content Type(s): Staff research, Staff analytical notes Research Topic(s): Exchange rates JEL Code(s): F, F3, F31
Multibank Holding Companies and Bank Stability Staff Working Paper 2018-51 Radoslav Raykov, Consuelo Silva-Buston This paper studies the relationship between bank holding company affiliation and the individual and systemic risk of banks. Using the 2005 hurricane season in the US as an exogenous shock to bank balance sheets, we show that banks that are part of a holding parent company are more resilient than independent banks. Content Type(s): Staff research, Staff working papers Research Topic(s): Financial institutions, Financial stability JEL Code(s): G, G1, G2
Assessing Global Potential Output Growth: October 2020 Staff Discussion Paper 2020-10 Xin Scott Chen, Ali Jaffery, Guillaume Nolin, Karim Salhab, Peter Shannon, Subrata Sarker This paper presents updated estimates of potential output growth for the global economy through 2022. Global potential output growth is expected to decline sharply in the aftermath of the COVID-19 pandemic and recover partially by the end of the projection horizon of the October 2020 Monetary Policy Report. Content Type(s): Staff research, Staff discussion papers Research Topic(s): Potential output, Productivity JEL Code(s): E, E1, E10, E2, E20, O, O4
Capital Structure, Pay Structure and Job Termination Staff Working Paper 2016-12 Jason Allen, James R. Thompson We develop a model to analyze the link between financial leverage, worker pay structure and the risk of job termination. Contrary to the conventional view, we show that even in the absence of any agency problem among workers, variable pay can be optimal despite workers being risk averse and firms risk neutral. Content Type(s): Staff research, Staff working papers Research Topic(s): Financial institutions, Labour markets JEL Code(s): G, G2, G24, J, J3, J33