The rise of non-regulated financial intermediaries in the housing sector and its macroeconomic implications: FB3-5/2017-36E-PDF

“The author examines the impact of non-regulated lenders in the mortgage market using a dynamic stochastic general equilibrium (DSGE) model. The model features two types of financial intermediaries that differ in three ways: (i) only regulated intermediaries face a capital requirement, (ii) non-regulated intermediaries finance themselves by selling securities and cannot accept deposits, and (iii) non-regulated intermediaries face a more elastic demand. This last assumption is based on empirical evidence for Canada revealing that non-regulated intermediaries issue loans at a lower interest rate. The results suggest that the non-regulated sector contributes to stabilize the economy by providing an alternative source of capital when the regulated sector in unable to fulfill the demand for credit. As a result, an economy with a large non-regulated sector experiences a smaller downturn after an adverse financial shock"--Abstract, p. ii.

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Department/Agency Bank of Canada.
Title The rise of non-regulated financial intermediaries in the housing sector and its macroeconomic implications
Series Title Bank of Canada staff working paper,
Publication Type Series - View Master Record
Language [English]
Format Electronic
Electronic Document

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Note "September 2017."
Date 2017.
Number of Pages ii, 44 p. :
Catalogue Number
  • FB3-5/2017-36E-PDF
Subject Terms Housing, Loans, Regulation, Statistical analysis