Data suggest that the Canadian financial structure, and particularly indirect finance (e.g., banking), have become more market-oriented. We associate this financial trend in part with the regulatory changes that have occurred in Canada since the 1980s. Financial intermediaries are increasingly...

The diversification benefits associated with banks off-balance-sheet activities (OBS), and particularly non- traditional activities, is a question much debated in the literature. These activities, related to the emergence of shadow banking, greatly contribute to the volatility of bank operating...

In order to complement the macro-prudential framework introduced in Basel III, we propose a new breed of indicators based on the degree of leverage which helps track the time-varying dimension of bank systemic risk—a key aspect of financial stability. Given the new sources of liquidity...

This paper investigates how banks, as a group, react to macroeconomic risk and uncertainty; more specifically, it examines the relationship between bank systemic risk and changes and disruptions in economic conditions. Adopting the methodology of Beaudry et al. (2001), we introduce a new...

This paper documents some stylized facts about the Canadian financial structure. I explore these empirical facts in the context of the Canadian financial legislation. I find that, over the 1990s, Canadian businesses became more heavily dependent on financial markets as their primary source of...

The purpose of this survey is to show how self-enforcing labor contracts can enhance the performance of macroeconomic models. I expose some desirable features of these dynamic contracts regarding the duplication of puzzling macroeconomic facts relative to the dynamics and persistence of...

During the last decades, banks off-balance sheet (OBS) activities (e.g. securitization, trading and fee-based activities) have greatly contributed to the increase in bank risk. However, the standard financial indicators such as the Value-at-Risk and the accounting leverage, exclude these...

Following Zhang (Accounting Review, 2007) we cast firm accruals in terms of short-term investment. Since many studies consider accruals as a smoothed measure of cash flows, we first adopt Zhang specification and augment the standard Jones model with a cash-flow variable. Second, if accruals are...

Purpose – The purpose of this paper is to analyse the link between product-mix and bank performance with a comprehensive look at the contribution of each component of banking activities. Design/methodology/approach – The generalized method of moments estimation approach the authors apply to...