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  • Frank Tian

Canadian Banking - 100 Years History

After the 2008 Great Financial Crisis, a friend in Asia asked me what made Canada largely stay out of trouble.


One of my colleagues said it was dumb luck, but I said there had to be more to it.


It was hard to pinpoint the exact reasons, so I gave a few possible answers.


- Relatively conservative culture

- Oligopoly structure so it is easier to regulate

- Originate-to-own mortgage vs. originate-to-sell


Now, 15 years later, Canadians are concerned about their money after witnessing the regional bank crisis in the south.


This naturally draws a comparison of the Canadian banking system vs. the American one once again.


In the Financial Post piece below, the financial historian John Turley-Ewart led us through the journey of Canadian banking in the last 150 years.


It turned out that the Canadian banking system became what it is today for a reason.


📌 1867-1923


In the 50 years after the Confederation, the small and regional banks in Canada had a failure rate as high as ~40%.


📌 1920s


This led to the policy choice of a few large national banks, with adequate capital and proper oversight.


📌 2001-2023


While the US saw the failure of 562 banks, Canada had … none.



This is not to say the Canadian banking system is without any issue. In fact, there is never a perfect model anywhere.


Due to the importance of the banking system in the economy, the quest for an effective and stable one is bound to carry on, after this turbulent March.

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