Working Paper: NBER ID: w4546
Authors: 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..
Keywords: banking systems; stability; efficiency; Canada; United States
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Canadian banking system's stability (F65) | profitability (L21) |
| Oligopolistic structure of Canadian banks (N12) | higher deposit rates (E43) |
| Canadian banking system's stability (F65) | higher net rates of return to equity (G12) |
| Higher interest income on securities in Canada (N22) | profitability (L21) |