Management by the Canadian Banks of Their Domestic Portfolios 1956-1971: An Econometric Study
Bibliographic record
Abstract
This study is an investigation of some important aspects of the management by the chartered banks of their domestic currency portfolios and net foreign assets over the period 1956-1971. Attention is focused on the specification of demand functions for various assets and liabilities of the banks and their mortgage affiliates. Interest-rate-setting decisions are not explicitly considered. The domestic portfolio choices of the banking industry are thought of as occurring at three related levels. Although all these decisions may be made virtually simultaneously, they follow a logical order in that some of them cannot be taken without prior knowledge of the probable outcome of other portfolio decisions. At the first level of the decision-making process the banking industry chooses its holdings of a number of assets and liabilities without recourse to an overall and contemporaneous portfolio-choice procedure. Various factors influence the holdings of these predetermined items. By way of example, levels of required primary and secondary reserves must be consistent with the legal provisions governing these assets. Loans and deposits are assumed to be determined by demand at interest rates set by the banks. The level of outstanding mortgage loans held by the industry is predetermined by the normal disbursement of funds consequent to loan approvals made earlier. Banks can affect the level of their mortgage holdings only by altering the number and amount of mortgage approvals they make. The flow of such approvals is shown to be sensitive to the growth in bank assets and to interest rate inducements. At the second level of the decision-making process the banking industry allocates portfolios between three broad categories: excess secondary reserves, tertiary liquid assets, and net foreign assets. Decisions made at this stage are conditioned by the outstanding levels of predetermined items, relative interest rates, and a number of special factors. In general, this aspect of bank behaviour is shown to be accurately described by portfolio-allocation models of the Brainard-Tobin type. At the third level of the decision-making process the banking industry chooses between the various assets that comprise broad portfolio categories. That is, subject to the chosen level of excess secondary reserves and the secondary reserve requirement, funds are allocated between excess primary reserves, treasury bills, and day loans. Since the demand function for excess primary reserves is a key part of the transmission mechanism of monetary policy in Canada, particular attention is paid to this aspect of bank behaviour. Similarly, subject to the chosen level of tertiary liquid assets, banks allocate funds between short and long Canadas and call loans. At this final decision-making stage portfolio choices are shown to depend upon the funds available for investment, interest rates past and present, and special factors. As is the case at all three decision-making levels, complete portfolio adjustment to external phenomena takes time. However, it proceeds more rapidly according to this study than other studies imply.
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How this classification was reachedexpand
Full frame distilled prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. Learned from the 10,348 direct Codex labels and 10,348 direct Gemma labels. Candidate is the union of thresholded teacher heads; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels or direct frontier model labels.
Codex and Gemma teacher scores by category
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.002 | 0.001 |
| Meta-epidemiology (narrow) | 0.000 | 0.000 |
| Meta-epidemiology (broad) | 0.000 | 0.000 |
| Bibliometrics | 0.002 | 0.003 |
| Science and technology studies | 0.000 | 0.000 |
| Scholarly communication | 0.000 | 0.000 |
| Open science | 0.001 | 0.000 |
| Research integrity | 0.000 | 0.000 |
| Insufficient payload (model declined to judge) | 0.000 | 0.000 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one teacher head, not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".