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 question we compare the risk-return trade-off of Canadian and U.S. banks in the context of market-based banking. We find that the sources of non-traditional income are 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 increase bank risk, our analysis does not allow us to 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 InfoPaper provided by Département des sciences administratives, UQO in its series RePAd Working Paper Series with number UQO-DSA-wp022013.
Length: 43 pages
Date of creation: 23 May 2013
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Bank performance; Market-oriented banking; Securitization; Non-interest income; Financial stability.;
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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