Credit-strapped Canadians continued to consume in wake of crisis
'Lending supply effect' compensated for Canada's credit crunch
Customers of Canadian banks that cut lending sharply following the financial crisis did not curtail consumption as a result, according to a Bank of Canada working paper. Instead, they compensated by drawing down liquid assets – a so-called lending supply effect.
Banks' Financial Distress, Lending Supply and Consumption Expenditure by Evren Damar, Reint Gropp and Adi Mordel, employs a "unique identification strategy" that links survey data on household consumption expenditure to bank-level data
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