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Did Canadian Corporate Bond Funds Increase their Exposures to Risks?

Author

Listed:
  • Rohan Arora
  • Nadeem Merali
  • Guillaume Ouellet Leblanc

Abstract

Canadian corporate bond mutual funds have rapidly increased in number and size in recent years. Their holdings have also become riskier, increasing their exposures to credit risk, interest rate risk and liquidity risk. We also briefly discuss financial stability implications.

Suggested Citation

  • Rohan Arora & Nadeem Merali & Guillaume Ouellet Leblanc, 2018. "Did Canadian Corporate Bond Funds Increase their Exposures to Risks?," Staff Analytical Notes 2018-7, Bank of Canada.
    • Handle: RePEc:bca:bocsan:18-7
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    File URL: https://www.bankofcanada.ca/2018/03/staff-analytical-note-2018-7/
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    References listed on IDEAS

    as
    1. Office of Financial Research (ed.), 2016. "2016 Financial Stability Report," Reports, Office of Financial Research, US Department of the Treasury, number 16-3, May.
    2. Goldstein, Itay & Jiang, Hao & Ng, David T., 2017. "Investor flows and fragility in corporate bond funds," Journal of Financial Economics, Elsevier, vol. 126(3), pages 592-613.
    3. Chen, Qi & Goldstein, Itay & Jiang, Wei, 2010. "Payoff complementarities and financial fragility: Evidence from mutual fund outflows," Journal of Financial Economics, Elsevier, vol. 97(2), pages 239-262, August.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Rohan Arora & Chen Fan & Guillaume Ouellet Leblanc, 2019. "Liquidity Management of Canadian Corporate Bond Mutual Funds: A Machine Learning Approach," Staff Analytical Notes 2019-7, Bank of Canada.
    2. Charles Gaa & Xuezhi Liu & Cameron MacDonald & Xiangjin Shen, 2019. "Évaluer la résilience du système bancaire canadien," Staff Analytical Notes 2019-16fr, Bank of Canada.
    3. Rohan Arora & Guillaume Bédard-Pagé & Guillaume Ouellet Leblanc & Ryan Shotlander, 2019. "Could Canadian Bond Funds Add Stress to the Financial System?," Staff Analytical Notes 2019-9, Bank of Canada.
    4. Rohan Arora & Guillaume Bédard-Pagé & Guillaume Ouellet Leblanc & Ryan Shotlander, 2019. "Les fonds d’obligations canadiennes peuvent-ils amplifier les tensions subies par le système financier?," Staff Analytical Notes 2019-9fr, Bank of Canada.
    5. Rohan Arora, 2018. "Redemption Runs in Canadian Corporate Bond Funds?," Staff Analytical Notes 2018-21, Bank of Canada.
    6. Guillaume Ouellet Leblanc & Rohan Arora, 2018. "How do Canadian Corporate Bond Mutual Funds Meet Investor Redemptions?," Staff Analytical Notes 2018-14, Bank of Canada.
    7. Guillaume Bédard-Pagé, 2019. "Non-Bank Financial Intermediation in Canada: An Update," Discussion Papers 2019-2, Bank of Canada.
    8. Charles Gaa & Xuezhi Liu & Cameron MacDonald & Xiangjin Shen, 2019. "Assessing the Resilience of the Canadian Banking System," Staff Analytical Notes 2019-16, Bank of Canada.

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    More about this item

    Keywords

    Financial markets; Financial stability;

    JEL classification:

    • G - Financial Economics
    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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