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The effect of the US subprime crisis on Canadian banks

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  • Bandyopadhyay, Satiprasad
  • Jha, Ranjini
  • Kennedy, Duane

Abstract

We examine whether the Canadian banking sector was afflicted by financial contagion from the 2008 subprime crisis in the United States financial sector. We find that Canadian banks were affected by contagion, though those with higher liquidity withstood better its adverse effects. Our results indicate that Canadian banks that had more transparent asset practices appear to be less adversely affected by contagion. However, higher levels of real estate-related assets including mortgage-backed securities worsened the impact of contagion.

Suggested Citation

  • Bandyopadhyay, Satiprasad & Jha, Ranjini & Kennedy, Duane, 2017. "The effect of the US subprime crisis on Canadian banks," Advances in accounting, Elsevier, vol. 36(C), pages 58-74.
    • Handle: RePEc:eee:advacc:v:36:y:2017:i:c:p:58-74
    DOI: 10.1016/j.adiac.2016.08.005
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    More about this item

    Keywords

    Financial crisis; Contagion; Asset quality;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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