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Bank loan portfolios and the Canadian monetary transmission mechanism

Author

Listed:
  • Wouter J. Den Haan
  • Steven W. Sumner
  • Guy M. Yamashiro

Abstract

Following a monetary tightening, bank loans to consumers decrease. This is true for both mortgage and non-mortgage loans, and it is true for a tightening by the Bank of Canada that is, and is not, a response to a tightening by the Federal Reserve System. In contrast, business loans increase following a monetary tightening. The `perverse' response of business loans cannot be explained by an increase in the demand for funds due to a reduction in real activity. These results are consistent with a change in bank portfolio behaviour in favour of business loans in response to a monetary tightening.

Suggested Citation

  • Wouter J. Den Haan & Steven W. Sumner & Guy M. Yamashiro, 2009. "Bank loan portfolios and the Canadian monetary transmission mechanism," Canadian Journal of Economics, Canadian Economics Association, vol. 42(3), pages 1150-1175, August.
    • Handle: RePEc:cje:issued:v:42:y:2009:i:3:p:1150-1175
    DOI: 10.1111/j.1540-5982.2009.01542.x
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    Citations

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    Cited by:

    1. Hempell, Hannah S. & Kok, Christoffer, 2010. "The impact of supply constraints on bank lending in the euro area - crisis induced crunching?," Working Paper Series 1262, European Central Bank.
    2. P. Siklos, B. Lavender, 2014. "The Credit Cycle And The Business Cycle In Canada And The U.S.: Two Solitudes," LCERPA Working Papers wm0065, Laurier Centre for Economic Research and Policy Analysis.
    3. Filardo, Andrew J. & Siklos, Pierre L., 2020. "The cross-border credit channel and lending standards surveys," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 67(C).
    4. Chen, Zhengyang & Valcarcel, Victor J., 2021. "Monetary transmission in money markets: The not-so-elusive missing piece of the puzzle," Journal of Economic Dynamics and Control, Elsevier, vol. 131(C).
    5. Oscar Valencia & Daniel Osorio & Pablo Garay, 2017. "The role of capital requirements and credit composition in the transmission of macroeconomic and financial shocks," Revista ESPE - Ensayos sobre Política Económica, Banco de la Republica de Colombia, vol. 35(84), pages 203-221, December.
    6. Luis Fernando Colunga Ramos, 2024. "The Loan Puzzle in Mexico," Working Papers 2024-15, Banco de México.
    7. Dia, Enzo & VanHoose, David, 2023. "Macroprudential regulatory policies with a dominant-bank oligopoly and fringe banks," Journal of Economics and Business, Elsevier, vol. 124(C).
    8. Kanas, Angelos & Vasiliou, Dimitrios & Eriotis, Nikolaos, 2012. "Revisiting bank profitability: A semi-parametric approach," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 22(4), pages 990-1005.

    More about this item

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General

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