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Canadian Bank Balance-Sheet Management: Breakdown by Types of Canadian Financial Institutions

Author

Listed:
  • David Xiao Chen
  • H. Evren Damar
  • Hani Soubra
  • Yaz Terajima

Abstract

The authors document leverage, capital and liquidity ratios of banks in Canada. These ratios are important indicators of different types of risk with respect to a bank’s balance-sheet management. Particular attention is given to the observations by different types of banks, including small banks that historically received less attention. In addition, the authors compare leverage and capital ratios for banks in Canada and the United States in the period leading up to the recent crisis. They find that in Canada, most of the risks indicated by these balance-sheet ratios are concentrated among large banks that are more likely able to withstand shocks due to their diversified portfolios. Some smaller banks, however, reveal vulnerability against liquidity risks. Regarding a Canada - U.S. comparison, small U.S. banks show more vulnerability than their larger counterparts, as well as an increasing trend in vulnerability prior to the crisis. In contrast, the ratios for small Canadian banks show increasing resilience.

Suggested Citation

  • David Xiao Chen & H. Evren Damar & Hani Soubra & Yaz Terajima, 2012. "Canadian Bank Balance-Sheet Management: Breakdown by Types of Canadian Financial Institutions," Discussion Papers 12-7, Bank of Canada.
  • Handle: RePEc:bca:bocadp:12-7
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    File URL: http://www.bankofcanada.ca/wp-content/uploads/2012/09/dp2012-07.pdf
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    References listed on IDEAS

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    1. Céline Gauthier & Toni Gravelle & Xuezhi Liu & Moez Souissi, 2011. "What Matters in Determining Capital Surcharges for Systemically Important Financial Institutions?," Discussion Papers 11-9, Bank of Canada.
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    Cited by:

    1. H. Evren Damar & Adi Mordel, 2017. "International Banking and Cross-Border Effects of Regulation: Lessons from Canada," International Journal of Central Banking, International Journal of Central Banking, vol. 13(2), pages 35-64, March.
    2. Christopher S. Sutherland, 2017. "What Explains Month-End Funding Pressure in Canada?," Discussion Papers 17-9, Bank of Canada.
    3. James Chapman & H. Evren Damar, 2015. "Shock Transmission Through International Banks: Canada," Technical Reports 105, Bank of Canada.

    More about this item

    Keywords

    Financial institutions; Financial stability; Financial system regulation and policies;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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