Indebtedness and the Household Financial Health: An Examination of the Canadian Debt Service Ratio Distribution

The household debt-to-disposable income ratio in Canada increased from 110 per cent in 1999 to 127 per cent in 2007. This increase has raised questions about the ability of households to service their increased debt if faced with a negative economic or socio-economic shock. The debt service ratio (DSR) measures the proportion of disposable income that households must devote to servicing their debt obligations. The aggregate DSR for Canada, as reported in the Bank of Canada's Financial System Review, has drifted up recently but remained below its historical average in 2007Q4. This would suggest that households' debt burden has remained broadly manageable. However, the aggregate DSR could mask potential vulnerabilities for the most heavily indebted households. The main contribution of this paper is that it examines the distribution of debt service burden amongst Canadian households using micro-data. This work shows that the density of households in the vulnerable tail of the DSR distribution has actually decreased somewhat since 1999, especially for lower-income households. Overall, our micro data analysis support inferences based on the aggregate data that, despite the increase in the debt-to-income ratio since the late 1990s, households remain well positioned to manage their increased debt levels. The paper also compares the DSR distributions for Canada and the U.S. The cross-country comparison suggests that, in 2004, the household sector in Canada seemed to be in a better financial position than U.S. households.Financial stability; Monetary and financial indicators

Assembling a Real-Financial Micro-Dataset for Canadian Households

The lack of consolidated Canadian micro data on household balance sheets and expenditures has been an important impediment to empirical research into real-financial linkages in the Canadian household sector. Our paper attempts to fill this data gap by merging household balance sheet data from the Canadian Financial Monitor survey with household expenditure data from the Survey of Household Spending. The merge process uses a categorical matching framework aimed at preserving the heterogeneity in the underlying datasets. The resulting combined dataset is a novel source of Canadian micro data on household finances and spending patterns. The dataset covers the period 1999 till 2005 and contains roughly 11,000 observations (households) for each year. We plan to use these combined data to test key real-financial linkages (like those between house prices, debt and household expenditures) for the Canadian household sector.Sectoral balance sheet

Non-distributional Word Vector Representations

Data-driven representation learning for words is a technique of central importance in NLP. While indisputably useful as a source of features in downstream tasks, such vectors tend to consist of uninterpretable components whose relationship to the categories of traditional lexical semantic theories is tenuous at best. We present a method for constructing interpretable word vectors from hand-crafted linguistic resources like WordNet, FrameNet etc. These vectors are binary (i.e, contain only 0 and 1) and are 99.9% sparse. We analyze their performance on state-of-the-art evaluation methods for distributional models of word vectors and find they are competitive to standard distributional approaches.Comment: Proceedings of ACL 201

What Explains Trends in Household Debt in Canada?

Similar to the experiences in many other countries, household indebtedness in Canada has exhibited an upward trend over the past 30 years. Both mortgage and non-mortgage (consumer) credit have contributed to this development. In this article, the authors use microdata to highlight the main factors underlying the strong trend increase since the late 1990s. Favourable housing affordability, owing to factors such as income growth and low interest rates, has supported significant increases in home-ownership rates and mortgage debt. Much of the rise in consumer credit has been facilitated by higher housing values (used as collateral for loans) and financial innovation that makes it easier for households to access this credit.

Correlation-based Intrinsic Evaluation of Word Vector Representations

We introduce QVEC-CCA--an intrinsic evaluation metric for word vector representations based on correlations of learned vectors with features extracted from linguistic resources. We show that QVEC-CCA scores are an effective proxy for a range of extrinsic semantic and syntactic tasks. We also show that the proposed evaluation obtains higher and more consistent correlations with downstream tasks, compared to existing approaches to intrinsic evaluation of word vectors that are based on word similarity.Comment: RepEval 2016, 5 page

The Bank of Canada's Senior Loan Officer Survey

The Bank of Canada maintains regular contact with financial institutions as part of the information-gathering process that feeds into the larger set of information used to arrive at its monetary policy decision. Since 1999, the Bank has been conducting a quarterly survey of the business-lending practices of major Canadian financial institutions. Analysis of the information collected shows that it is correlated with future growth in both credit and business investment. This article focuses on how the survey is conducted and describes the construction of the summary statistics, highlighting the key statistical relationships in the historical survey data.