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A Comparison of the United States and Canadian Banking Systems in the Twentieth Century: Stability vs. Efficiency?

Author

Listed:
  • Michael D. Bordo
  • Hugh Rockoff
  • Angela Redish
Abstract
This paper asks whether the vaunted comparative stability of the Canadian banking system has been purchased at the cost of creating an oligopoly. We assembled a data set that compares bank failures, lending rates, interest paid on deposits and related variables over the period 1920 to 1980. Our principal findings are that: (1) interest rates paid on deposits were generally higher in Canada; (2) interest income received on securities was generally slightly higher in Canada; (3) interest rates charged on loans were generally quite similar; (4) net rates of return to equity were generally higher in Canada than in the U.S..

Suggested Citation

  • Michael D. Bordo & Hugh Rockoff & Angela Redish, 1993. "A Comparison of the United States and Canadian Banking Systems in the Twentieth Century: Stability vs. Efficiency?," NBER Working Papers 4546, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:4546
    Note: ME
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    References listed on IDEAS

    as
    1. James, John A., 1976. "The Development of the National Money Market, 1893-1911," The Journal of Economic History, Cambridge University Press, vol. 36(4), pages 878-897, December.
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    6. repec:ucp:bknber:9780226301129 is not listed on IDEAS
    7. Claudia Goldin & Hugh Rockoff, 1992. "Strategic Factors in Nineteenth Century American Economic History: A Volume to Honor Robert W. Fogel," NBER Books, National Bureau of Economic Research, Inc, number gold92-1.
    8. Alli Nathan & Edwin H. Neave, 1989. "Competition and Contestability in Canada's Financial System: Empirical Results," Canadian Journal of Economics, Canadian Economics Association, vol. 22(3), pages 576-594, August.
    9. Haubrich, Joseph G., 1990. "Nonmonetary effects of financial crises : Lessons from the great depression in Canada," Journal of Monetary Economics, Elsevier, vol. 25(2), pages 223-252, March.
    10. John H. Boyd & Stanley L. Graham, 1991. "Investigating the banking consolidation trend," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 15(Spr), pages 3-15.
    11. Duca, John V., 1992. "US business credit sources, demand deposits, and the 'missing money'," Journal of Banking & Finance, Elsevier, vol. 16(3), pages 567-583, June.
    12. Claudia Goldin & Hugh Rockoff, 1992. "Introduction to "Strategic Factors in Nineteenth Century American Economic History: A Volume to Honor Robert W. Fogel"," NBER Chapters, in: Strategic Factors in Nineteenth Century American Economic History: A Volume to Honor Robert W. Fogel, pages 1-8, National Bureau of Economic Research, Inc.
    13. Howard Bodenhorn & Hugh Rockoff, 1992. "Regional Interest Rates in Antebellum America," NBER Chapters, in: Strategic Factors in Nineteenth Century American Economic History: A Volume to Honor Robert W. Fogel, pages 159-187, National Bureau of Economic Research, Inc.
    14. R. Alton Gilbert, 1977. "Effects of interest on demand deposits: implications of compensating balances," Review, Federal Reserve Bank of St. Louis, vol. 59(Nov), pages 8-15.
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    Citations

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    Cited by:

    1. Bordo, Michael, 1995. "Regulation and bank stability: Canada and the United States, 1870-1980," Policy Research Working Paper Series 1532, The World Bank.
    2. David C. Wheelock, 1993. "Is the banking industry in decline? Recent trends and future prospects from a historical perspective," Review, Federal Reserve Bank of St. Louis, issue Sep, pages 3-22.
    3. Elmas Yaldiz & Flavio Bazzana, 2010. "The effect of market power on bank risk taking in Turkey," Financial Theory and Practice, Institute of Public Finance, vol. 34(3), pages 297-314.
    4. Carolyn Currie, 2003. "Towards a General Theory of Financial Regulation: Predicting, Measuring and Preventing Financial Crises," Working Paper Series 132, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
    5. Elena Carletti & Philipp Hartmann, 2003. "Competition and stability: what's special about banking?," Chapters,in: Monetary History, Exchange Rates and Financial Markets, chapter 8 Edward Elgar Publishing.
    6. David C. Wheelock, 2003. "Commentary on The real effects of U.S. banking deregulation," Review, Federal Reserve Bank of St. Louis, vol. 85(Jul), pages 129-134.
    7. Cécile Carpentier & Jean-Marc Suret, 2003. "The Canadian and American Financial Systems: Competition and Regulation," Canadian Public Policy, University of Toronto Press, vol. 29(4), pages 431-447, December.
    8. Mark Carlson, 2015. "Lessons from the Historical Use of Reserve Requirements in the United States to Promote Bank Liquidity," International Journal of Central Banking, International Journal of Central Banking, vol. 11(1), pages 191-224, January.
    9. Beck, Thorsten, 2008. "Bank competition and financial stability : friends or foes ?," Policy Research Working Paper Series 4656, The World Bank.
    10. Rockoff, Hugh & White, Eugene N., 2012. "Monetary Regimes and Policy on a Global Scale: The Oeuvre of Michael D. Bordo," MPRA Paper 49672, University Library of Munich, Germany, revised May 2013.
    11. Andrea Cipollini & Franco Fiordelisi, 2009. "The impact of bank concentration on financial distress: the case of the European banking system," Centro Studi di Banca e Finanza (CEFIN) (Center for Studies in Banking and Finance) 0014, Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi".
    12. Magdalena Ziolo & Beata Zofia Filipiak & Iwona Bąk & Katarzyna Cheba, 2019. "How to Design More Sustainable Financial Systems: The Roles of Environmental, Social, and Governance Factors in the Decision-Making Process," Sustainability, MDPI, vol. 11(20), pages 1-34, October.

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    More about this item

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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