Is the Canadian Banking System Really ¡°Stronger¡± than the U.S. One?
AbstractThe Canadian banking system is considered one of the ¡°best¡± in the world (Bordo et al., 2011). To examine this issue, this paper compares the risk-return trade-off of Canadian and U.S. banks in the context of market-based banking. It is found that non-interest income is actually more volatile in Canada, essentially because Canadian banks are more involved in trading and capital markets business lines than their U.S. peers. Even though U.S. banks are more exposed to securitization, which contributes to increasing bank risk (Calomiris and Mason, 2004), the analysis here does not conclude that the Canadian banking system is performing significantly better. On one hand, Canadian banks do better in downturns; on the other hand however, depending on the statistics, U.S. banks tend to benefit more from the transition to market-based banking.
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Bibliographic InfoArticle provided by Better Advances Press, Canada in its journal Review of Economics & Finance.
Volume (Year): 3 (2013)
Issue (Month): (November)
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Postal: 17 Alton Towers Circle, Unit 101 Toronto, ON, M1V3L8, Canada
Find related papers by JEL classification:
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
- G20 - Financial Economics - - Financial Institutions and Services - - - General
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
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