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 Topic(s): Credit and credit aggregates, Financial institutions, Financial stability JEL Code(s): D, D2, D22, G, G0, G01, G2
An Optimal Macroprudential Policy Mix for Segmented Credit Markets Staff Working Paper 2021-31 Jelena Zivanovic How can macroprudential policy and monetary policy stabilize segmented credit markets? Is there a trade-off between financial stability and price stability? I use a theoretical model to evaluate the performance of alternative policies and find the optimal mix of macroprudential and monetary policy in response to aggregate shocks. Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Credit and credit aggregates, Credit risk management, Financial stability, Financial system regulation and policies JEL Code(s): E, E3, E30, E4, E44, E5, E50
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 Topic(s): Financial institutions, Financial markets, Financial stability, Financial system regulation and policies, Wholesale funding JEL Code(s): G, G0, G01, G2, G21
June 16, 2021 Opening Statement before the Standing Senate Committee on Banking, Trade and Commerce Opening statement Tiff Macklem Standing Senate Committee on Banking, Trade and Commerce Ottawa, Ontario Content Type(s): Press, Speeches and appearances, Opening statements Topic(s): Coronavirus disease (COVID-19), Financial stability, Monetary policy, Recent economic and financial developments
Can regulating bank capital help prevent and mitigate financial downturns? Staff Analytical Note 2021-12 Alejandro García, Josef Schroth Countercyclical capital buffers are regulatory measures developed in response to the global financial crisis of 2008–09. This note focuses on how time-varying capital buffers can improve financial stability in Canada Content Type(s): Staff research, Staff analytical notes Topic(s): Business fluctuations and cycles, Credit and credit aggregates, Credit risk management, Financial stability, Financial system regulation and policies, Lender of last resort JEL Code(s): E, E1, E13, E3, E32, E4, E44
Shaping the future: Policy shocks and the GDP growth distribution Staff Working Paper 2021-24 Francois-Michel Boire, Thibaut Duprey, Alexander Ueberfeldt Can central bank and government policies impact the risks around the outlook for GDP growth? We find that fiscal stimulus makes strong GDP growth more likely—even more so when monetary policy is constrained—rather than weak GDP growth less likely. Thus, fiscal stimulus should accelerate the recovery phase of the COVID-19 pandemic. Content Type(s): Staff research, Staff working papers Topic(s): Central bank research, Econometric and statistical methods, Financial stability, Fiscal policy, Monetary policy JEL Code(s): C, C3, C32, C5, C53, E, E5, E52, E6, E62
May 20, 2021 Release of the Financial System Review Opening statement Tiff Macklem Ottawa, Ontario Press conference following the release of the Financial System Review. Content Type(s): Press, Speeches and appearances, Opening statements Topic(s): Climate change, Cyber security, Financial markets, Financial stability, Financial system regulation and policies, Housing, Recent economic and financial developments
Detecting exuberance in house prices across Canadian cities Staff Analytical Note 2021-9 Ugochi Emenogu, Cars Hommes, Mikael Khan We introduce a model to detect periods of extrapolative house price expectations across Canadian cities. The House Price Exuberance Indicator can be updated on a quarterly basis to support the Bank of Canada’s broader assessment of housing market imbalances. Content Type(s): Staff research, Staff analytical notes Topic(s): Econometric and statistical methods, Financial stability, Housing JEL Code(s): C, C5, C53, R, R2, R21, R3, R31
COVID-19’s impact on the financial health of Canadian businesses: An initial assessment Staff Analytical Note 2021-8 Timothy Grieder, Mikael Khan, Juan Ortega, Callie Symmers Despite COVID-19 challenges, bold policy measures in Canada have helped businesses manage cash flow pressures and kept insolvency filings low. But the impact of the pandemic has been uneven, and the financial health of some firms may further deteriorate over the next year. Content Type(s): Staff research, Staff analytical notes Topic(s): Coronavirus disease (COVID-19), Credit and credit aggregates, Financial stability, Firm dynamics, Recent economic and financial developments, Sectoral balance sheet JEL Code(s): G, G3, G31, G32, G33, G38
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 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