International Banking and Liquidity Risk Transmission: Evidence from Canada

This paper investigates how liquidity conditions in Canada may affect domestic and/or foreign lending of globally active Canadian banks, and whether this transmission is influenced by individual bank characteristics. It finds that Canadian banks expanded their foreign lending during the recent finan...

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Bibliographic Details
Published in:	IMF economic review Vol. 63; no. 3; pp. 455 - 478
Main Authors:	CHAPMAN, JAMES, DAMAR, HALIL EVREN
Format:	Journal Article
Language:	English
Published:	London Palgrave Macmillan 01-11-2015 Palgrave Macmillan UK Palgrave Macmillan Ltd. (Springer)
Subjects:	Analysis Balance sheets Bank assets Bank liquidity Banking crises Banking industry Banks Capital Markets Central banks E44 Economic aspects Economic Policy Economics Economics and Finance F36 Financial crises Forecasts and trends G21 G32 Illiquid assets Industry forecasts International Economics Liquidity (Finance) Liquidity risk Loans Macroeconomics/Monetary Economics//Financial Economics Management Tangible assets Canada F36 E44 G21 G32
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Summary:	This paper investigates how liquidity conditions in Canada may affect domestic and/or foreign lending of globally active Canadian banks, and whether this transmission is influenced by individual bank characteristics. It finds that Canadian banks expanded their foreign lending during the recent financial crisis, often through acquisitions of foreign banks. It also finds evidence that internal capital markets play a role in the lending activities of globally active Canadian banks during times of heightened liquidity risk.
ISSN:	2041-4161 2041-417X
DOI:	10.1057/imfer.2015.32