Basel III capital buffers and Canadian credit unions lending: Impact of the credit cycle and the business cycle ∗∗∗ Helyoth Hessou Department of Finance, Insurance and Real Estate Faculty of Business Administration Laval University, Quebec, Canada Email:
[email protected] Van Son Lai 1 Laboratory for Financial Engineering of Laval University Department of Finance, Insurance and Real Estate Faculty of Business Administration Laval University, Quebec, Canada Email:
[email protected] and IPAG Business School, Paris, France November 2017 ∗ We appreciate the insights from the Guest Editor (Sabri Boubaker) and the valuable comments from two anonymous referees. We acknowledge the financial support of the Autorité des Marchés Financiers (AMF) Education and Good Governance Fund Contract SC- 1968), the Conrad Leblanc Fund, and the Social Sciences and Humanities Research Council of Canada. We have benefitted from the valuable comments from Molly Burns, Merwan Engineer, Ben Naceur, Kyounghoon Park, Marc-André Pigeon, James A. Wilcox, experts from the AMF and conference participants at the 2016 International Workshop on Financial System Architecture & Stability at the University of Victoria, B.C., Canada, the 2016 International Summit of Cooperatives in Quebec City, Canada and the 2016 Paris Financial Management Conference in Paris, France. We also thank Marc-André Pigeon and Les Czarnota from Credit Union Central of Canada for their helpful advices and appreciate the excellent research assistance provided by Amine Arfaoui, Jean-Philippe Allard- Desrochers, Houa Balit and Olivier Côté-Lapierre. 1 Contact author . 1 Basel III capital buffers and Canadian credit unions lending: Impact of the credit cycle and the business cycle Abstract We take advantage of the long-standing regulation of the risk-based capital and the leverage ratio in Canada to provide empirical evidence on the relation between the credit unions’ capital buffers and loans to members.