Analyzing supply and demand for business loans using microdata from the Senior Loan Officer Survey Staff Analytical Note 2021-13 Dylan Hogg Both supply and demand factors help determine the level of business lending in the economy, but most data show only their combined effect on prices and quantities. Using the Bank of Canada’s Senior Loan Officer Survey microdata on financial institutions’ lending conditions and demand, we separate supply from demand effects. Content Type(s): Staff research, Staff analytical notes Research Topic(s): Credit and credit aggregates, Financial institutions, Financial stability JEL Code(s): D, D2, D22, G, G0, G01, G2
Bank Runs, Bank Competition and Opacity Staff Working Paper 2021-30 Toni Ahnert, David Martinez-Miera How is the stability of the financial sector affected by competition in the deposit market and by decisions banks make about transparency? We find that policies that aim to increase bank competition lead to higher bank deposit rates, increasing both withdrawal incentives and instability. Content Type(s): Staff research, Staff working papers Research Topic(s): Financial institutions, Financial markets, Financial stability, Financial system regulation and policies, Wholesale funding JEL Code(s): G, G0, G01, G2, G21
Consumer Cash Withdrawal Behaviour: Branch Networks and Online Financial Innovation Staff Working Paper 2021-28 Heng Chen, Matthew Strathearn, Marcel Voia The physical network of bank branches is important in how consumers manage their cash holdings. This paper estimates how consumer withdrawal behaviour responds to the distance they must travel to their branch. Content Type(s): Staff research, Staff working papers Research Topic(s): Bank notes, Digital currencies and fintech JEL Code(s): G, G2, G21, R, R2, R22
COVID-19 crisis: Liquidity management at Canada’s largest public pension funds Staff Analytical Note 2021-11 Guillaume Bédard-Pagé, Daniel Bolduc-Zuluaga, Annick Demers, Jean-Philippe Dion, Manu Pandey, Léanne Berger-Soucy, Adrian Walton We examine how the eight largest Canadian public pension funds managed liquidity during the market turmoil in March 2020. The funds were generally resilient to large demands for liquidity and relied heavily on Canada's core funding markets. Content Type(s): Staff research, Staff analytical notes Research Topic(s): Coronavirus disease (COVID-19), Financial institutions, Financial markets JEL Code(s): E, E5, E58, G, G0, G01, G2, G23
An Exploration of First Nations Reserves and Access to Cash Staff Discussion Paper 2021-8 Heng Chen, Walter Engert, Kim Huynh, Daneal O’Habib Adequate cash distribution is one the Bank of Canada’s core interests. Canadians’ ability to access cash influences the Bank’s thinking on issuing a central bank digital currency. We provide a perspective on these issues by exploring access of First Nations reserves to cash. Content Type(s): Staff research, Staff discussion papers Research Topic(s): Bank notes, Digital currencies and fintech, Financial institutions, Financial services, Payment clearing and settlement systems JEL Code(s): E, E4, E41, E42, E5, G, G2, G21
An Empirical Analysis of Bill Payment Choices Staff Working Paper 2021-23 Anneke Kosse How do Canadians pay their bills? 2019 survey data collected from over 4,000 Canadian consumers show how people’s bill payment choices vary with consumer characteristics and types of bills. The data also reveal that many consumers feel limited in their choices, which suggests that preferences of billers might play an important role as well. Content Type(s): Staff research, Staff working papers Research Topic(s): Bank notes, Econometric and statistical methods, Financial services, Payment clearing and settlement systems JEL Code(s): D, D1, D9, G, G2
Optimal Monetary and Macroprudential Policies Staff Working Paper 2021-21 Josef Schroth Optimal coordination of monetary and macroprudential policies implies higher risk weights on (safe) bonds any time that banks are required to hold additional capital buffers. Coordination also implies a somewhat tighter monetary-policy stance whenever such capital buffers are released. Content Type(s): Staff research, Staff working papers Research Topic(s): Credit and credit aggregates, Financial stability, Financial system regulation and policies, Inflation targets, Monetary policy JEL Code(s): E, E4, E44, E6, E60, G, G2, G21, G28
Update on housing market imbalances and household indebtedness Staff Analytical Note 2021-4 Mikael Khan, Olga Bilyk, Matthew Ackman Exceptional strength in the housing market during the pandemic is underpinning Canada’s economic recovery. However, two key vulnerabilities—housing market imbalances and elevated household indebtedness—have intensified. Content Type(s): Staff research, Staff analytical notes Research Topic(s): Coronavirus disease (COVID-19), Credit and credit aggregates, Financial stability, Housing, Recent economic and financial developments, Sectoral balance sheet JEL Code(s): D, D1, D14, D8, D84, E, E5, G, G2, G21, G28, R, R2, R21
Non-bank financial intermediation in Canada: a pulse check Staff Analytical Note 2021-2 Rohan Arora, Guillaume Bédard-Pagé, Philippe Besnier, Hayden Ford, Alan Walsh The Canadian non-bank financial intermediation (NBFI) sector saw strong growth in 2018 and 2019. In 2020, COVID‑19 caused a financial shock. We provide a preliminary analysis on the impact of COVID‑19 on the sector as well as an update on its growth. Content Type(s): Staff research, Staff analytical notes Research Topic(s): Coronavirus disease (COVID-19), Financial institutions, Financial markets, Financial stability JEL Code(s): G, G0, G01, G2, G20, G23
Imperfect Banking Competition and Macroeconomic Volatility: A DSGE Framework Staff Working Paper 2021-12 Jiaqi Li How do banks adjust their loan rate markup in response to macroeconomic shocks? Content Type(s): Staff research, Staff working papers Research Topic(s): Business fluctuations and cycles, Financial institutions, Interest rates JEL Code(s): E, E3, E32, E4, E44, G, G2, G21, L, L1, L13