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Show Me the Money

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Author Info

  • Vladimir Klyuev

Abstract

This paper examines access to business finance by Canadian small and medium-sized enterprises (SMEs) and to housing finance by Canadian households (particularly non-prime borrowers) against the background of a fairly concentrated and protected banking industry. It finds access broadly adequate for the former group. However, given the dominance of the large banks and their fairly low risk tolerance, financing of riskier projects is a challenge. Problems with venture capital, plausibly related to the prevalence of tax-advantaged labor-sponsored funds, exacerbate the situation for the most innovative SMEs. The paper also finds the market for housing finance to be highly advanced and sophisticated. However, non-prime mortgage financing is in its infancy in Canada, and further development of that sector (while avoiding the excesses that beset the U.S. market in the last few years) would be beneficial. More broadly, despite recent innovations, options available to Canadians for financing house purchases are still somewhat limited, with scarce availability of mortgage maturities beyond five years particularly surprising. Further advances in securitization could help progress in both of these areas.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 08/22.

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Length: 29
Date of creation: 01 Jan 2008
Date of revision:
Handle: RePEc:imf:imfwpa:08/22

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Keywords: Bank credit; Financial risk; Financial systems; mortgages; mortgage; smes; sme; housing finance; small business; mortgage insurance; sme financing; mortgage market; homeownership; home ownership; residential mortgages; entrepreneurs; mortgage finance; mortgage lending; mortgage-backed securities; mortgage loans; entrepreneurship; home equity; sme sector; business development; fixed rate mortgage; mortgage financing; small businesses; small and medium-sized enterprises; mortgage brokers; medium-size enterprises; mortgage loan; small enterprises; eligible mortgages; mortgage markets; long-term mortgages; small loans; mortgage bankers; risk mortgages; small business owners; housing loans; small firms; mortgage obligations; mortgage broker; mortgage bond; small and medium-sized enterprise;

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References

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  1. James A. Brander & Raphael Amit & Werner Antweiler, 2002. "Venture-Capital Syndication: Improved Venture Selection vs. The Value-Added Hypothesis," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 11(3), pages 423-452, 09.
  2. Oecd, 2006. "Risk Capital in OECD Countries: Past Experience, Current Situation and Policies for Promoting Entrepreneurial Finance," Financial Market Trends, OECD Publishing, vol. 2006(1), pages 113-151.
  3. Gaudreault, Valerie & Baldwin, John R. & Gellatly, Guy, 2002. "Financing Innovation in New Small Firms: New Evidence from Canada," Analytical Studies Branch Research Paper Series 2002190e, Statistics Canada, Analytical Studies Branch.
  4. Cumming, Douglas J. & MacIntosh, Jeffrey G., 2006. "Crowding out private equity: Canadian evidence," Journal of Business Venturing, Elsevier, vol. 21(5), pages 569-609, September.
  5. Vladimir Klyuev & Paul Mills, 2007. "Is Housing Wealth an “ATM”? The Relationship Between Household Wealth, Home Equity Withdrawal, and Saving Rates," IMF Staff Papers, Palgrave Macmillan, vol. 54(3), pages 539-561, July.
  6. Danny Leung & Césaire Meh & Yaz Terajima, 2008. "Are There Canada-U.S. Differences in SME Financing?," Working Papers 08-41, Bank of Canada.
  7. Douglas J. Cumming & Jeffrey G. MacIntosh, 2007. "Mutual funds that invest in private equity? An analysis of labour-sponsored investment funds," Cambridge Journal of Economics, Oxford University Press, vol. 31(3), pages 445-487, May.
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Cited by:
  1. John Kiff, 2009. "Canadian Residential Mortgage Markets," IMF Working Papers 09/130, International Monetary Fund.

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