Why did Canadian municipal credit conditions improve so dramatically after the 2008 recession compared to other sub-national governments around the world? This is the subject of a new IMFG Paper by Kyle Hanniman, A Good Crisis: Canadian Municipal Credit Conditions after the Lehman Brothers Bankruptcy.
Like most governments, Canadian municipalities were unable to borrow immediately after the Lehman Brothers bankruptcy. But not long afterwards, they bounced back, as interest rates plunged, demand for long-term bonds increased, and the investor base expanded. Provincial and federal governments were in even better condition. Hanniman’s study compares municipal, provincial, and federal credit conditions, reveals the resilience of Canada’s municipal borrowers in the face of global credit shocks, and speaks to the virtues of Canada’s tightly regulated system of municipal borrowing.
About the Author
Kyle Hanniman is an Assistant Professor in the Department of Political Studies, Queen’s University, and a former IMFG Post-Doctoral Fellow.