The Effect of the US Sub-Prime Crisis on Canadian Banks

54 Pages Posted: 29 Aug 2014 Last revised: 16 Sep 2016

See all articles by Sati P. Bandyopadhyay

Sati P. Bandyopadhyay

University of Waterloo

Ranjini Jha

University of Waterloo - School of Accounting and Finance

Duane B. Kennedy

University of Waterloo - School of Accounting and Finance

Date Written: August 29, 2016

Abstract

We examine whether the Canadian banking sector was afflicted by financial contagion from the 2008 sub-prime crisis in the United States financial sector. We find that Canadian banks were affected by contagion, though those with higher liquidity withstood better its adverse effects. Our results indicate that Canadian banks that had more transparent asset practices appear to be less adversely affected by contagion. However, higher levels of real estate-related assets including mortgage-backed securities worsened the impact of contagion.

Keywords: Financial Crisis; Contagion; Asset Quality

JEL Classification: G01; G21

Suggested Citation

Bandyopadhyay, Sati P. and Jha, Ranjini and Kennedy, Duane B., The Effect of the US Sub-Prime Crisis on Canadian Banks (August 29, 2016). Available at SSRN: https://ssrn.com/abstract=2488108 or http://dx.doi.org/10.2139/ssrn.2488108

Sati P. Bandyopadhyay

University of Waterloo ( email )

School of Accountancy
Waterloo, Ontario N2L 3G1
Canada
519-888-4567, ext. 2533 (Phone)
519-888-7562 (Fax)

Ranjini Jha

University of Waterloo - School of Accounting and Finance ( email )

200 University Avenue West
Waterloo, Ontario N2L 3G1 N2L 3G1
Canada

Duane B. Kennedy (Contact Author)

University of Waterloo - School of Accounting and Finance ( email )

200 University Avenue West
Waterloo, Ontario N2L 3G1
Canada
519-888-4752 (Phone)

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