Service disruption

Due to maintenance, the Publications.gc.ca website may operate intermittently between 5:00 am ET until 9:00 am ET on Sunday, October 22, 2017.

Cross-border bank flows and monetary policy: FB3-5/2017-34E-PDF

implications for Canada /

“Using the Bank for International Settlements (BIS) Locational Banking Statistics data on bilateral bank claims from 1995 to 2014, we analyze the impact of monetary policy on cross-border bank flows. We find that monetary policy in a source country is an important determinant of cross-border bank flows. In addition, we find evidence in favor of a cross-border portfolio channel that works in parallel with the traditional bank lending channel. As tighter monetary conditions in source countries erode the net worth and collateral values of domestic borrowers, banks reallocate credit away from relatively risky domestic borrowers toward safer foreign counterparties. The cross-border reallocation of credit is more pronounced for source countries with weaker financial sectors that are likely more risk averse. Also, the reallocation is directed toward borrowers in advanced economies, or those in economies with investment-grade sovereign rating. In particular, source countries with tighter monetary policy increase cross-border credit to Canada. Our study highlights the spillovers of domestic monetary policy on foreign credit, which enhances the understanding of the international monetary transmission mechanism through global banks"--Abstract, p. ii.

Permanent link to this Catalogue Record: What is a permanent link?
http://publications.gc.ca/pub?id=9.844598&sl=0
MARC XML Format   MARC HTML Format

Department/Agency Bank of Canada.
Title Cross-border bank flows and monetary policy
Subtitle implications for Canada /
Series Title Bank of Canada staff working paper,
Publication Type Series - View Master Record
Language [English]
Format Electronic
Electronic Document

Archived Content

Information identified as archived is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please contact the authoring department to request a format other than those available.

We invite you to consult the Frequently Asked Questions page for additional information regarding the Archived Content notice.


Having trouble opening this document?

Note: The URLs contained in this/these document(s) may no longer be functional
Note "August 2017."
Date 2017.
Number of Pages iii, 46 p. :
Catalogue Number
  • FB3-5/2017-34E-PDF
Subject Terms Banks, Credit, Monetary policy, Statistical analysis