Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/95689
Authors: 
Beyhaghi, Mehdi
D'Souza, Chris
Roberts, Gordon S.
Year of Publication: 
2013
Series/Report no.: 
Bank of Canada Working Paper 2013-50
Abstract: 
We employ a comprehensive data set and a variety of methods to provide evidence on the magnitude of large banks' funding advantage in Canada, and on the extent to which market discipline exists across different securities issued by the Canadian banks. The banking sector in Canada provides a unique setting in which to examine market discipline along with the prospects of proposed reforms, because Canada has no history of government bailouts. Our results suggest that large banks likely have a funding advantage over small banks after controlling for bank-specific and market risk factors. Working with hand-collected market data on debt issues by large banks, we also find that market discipline exists for subordinated debt and not for senior debt.
Subjects: 
Financial institutions
Interest rates
JEL: 
G01
G21
G28
G32
G33
Document Type: 
Working Paper

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