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Bank loan portfolios and the Canadian monetary transmission mechanism |
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| Authors: | Wouter J. Den Haan Steven W. Sumner Guy M. Yamashiro |
| Affiliation: | Department of Economics, University of Amsterdam; Department of Economics, University of San Diego; Department of Economics, California State University, Long Beach |
| Abstract: | 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. |
| Keywords: | E40 |