I. Canadian banks and the credit turmoil -- II. Canadian residential mortgage markets : boring but effective? -- III. The impact of global shocks on Canada : what do macro-financial linkages tell us? -- IV. Is the Canadian housing market overvalued? : a tale of two regions -- V. How do commodity prices affect economic slumps in commodity exporters?
Summary
This Selected Issues paper on Canada examines economic development and policies. Capital ratios before the crisis have been a key determinant of bank performance during the turmoil; and Canadian banks had ample capital. Specifically, most banks with critically low capital at end-2006 later experienced dramatic equity value declines, and many had to be rescued. Regulatory and structural factors contributed to the resilience of Canadian banks by reducing their incentives to take risks
