Why are Canadian Banks More Resilient?

By Lev Ratnovski, Rocco R. Huang. Social Science Research Network, 2009

188 citations recorded by the source corpus.

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.

View Paper: https://www.semanticscholar.org/paper/ce0f671d668949c4d09958c2782506a56bf54f1d

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

Citations in the corpus

Competition and Stability in Banking (2016, unknown): “27 See Ratnovski and Huang (2009) with evidence from the 72 largest commercial banks in OECD countries.”
Banks’ Capital Buffer, Risk and Performance in the Canadian Banking System: Impact of Business Cycles and Regulatory Changes (2013, background): “…should be higher during 3 Other reasons include conservative mortgage practices, non-reliance on money market wholesale funding, and higher liquidity ratios (e.g., Northcott et al (2009), Ratnovski and Huang (2009)). booming economic periods because this is when banks can accumulate more capital.”
Strategic Complementarity, Fragility, and Regulation (2014, background): “7 We provide a general framework, which nests among others the models of Morris and Shin (1998, 2004), Rochet and Vives (2004), and Bebchuk and Goldstein (2011).”
Is financial inclusion good for bank stability? International evidence (2017, background): “Ratnovski and Huang (2009) show that the ample retail depository funding that was the key factor behind the relative resilience of Canadian banks during the 2008 turmoil.”
The Dark Side of Bank Wholesale Funding (2010, background): “However, the credit market turmoil that started in 2007 revealed a "dark side" of wholesale funding (Huang and Ratnovski, 2009).”
The Impact of Off-Balance-Sheet Activities on Banks Returns: An Application of the ARCH-M to Canadian Data (2010, methodology): “13 On the relative resilience of the Canadian banking system, see Ratnovski and Huang (2009). 14 In other words, if we successfully document the emergence of a risk-premium associated to OBS activities based on Canadian data, it should not be too surprising, applying the same ARCH-M methodology, to ”