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Canadian Banking Solvency, 1922-1940

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  • Kryzanowski, Lawrence
  • Roberts, Gordon S

Abstract

The use of market value accounting to restate the year-end balance sheets for Canadian banks strongly suggests that only one surviving bank was economically solvent during the Depression. Like U.S. S&Ls, the authors' alternative hypothesis argues that Canadian banks continued to operate because of the Canadian government's (forebearance) policy of providing an implicit 100 percent guarantee of bank deposits, standing ready to lend to banks, and encouraging early mergers of troubled and healthier banks. Unlike the stylized fact, the role of national branching was to facilitate this policy by reducing the number of banks and lessening competition. Copyright 1993 by Ohio State University Press.

Suggested Citation

  • Kryzanowski, Lawrence & Roberts, Gordon S, 1993. "Canadian Banking Solvency, 1922-1940," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 25(3), pages 361-376, August.
  • Handle: RePEc:mcb:jmoncb:v:25:y:1993:i:3:p:361-76
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    Citations

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    Cited by:

    1. Michael D. Bordo & Angela Redish & Hugh Rockoff, 2011. "Why didn't Canada have a banking crisis in 2008 (or in 1930, or 1907, or ...)?," NBER Working Papers 17312, National Bureau of Economic Research, Inc.
    2. repec:eee:crpeac:v:32:y:2015:i:c:p:67-77 is not listed on IDEAS
    3. Randall Morck & Michael Percy & Gloria Tian & Bernard Yeung, 2005. "The Rise and Fall of the Widely Held Firm: A History of Corporate Ownership in Canada," NBER Chapters,in: A History of Corporate Governance around the World: Family Business Groups to Professional Managers, pages 65-148 National Bureau of Economic Research, Inc.
    4. Bernanke, Ben S, 1983. "Nonmonetary Effects of the Financial Crisis in Propagation of the Great Depression," American Economic Review, American Economic Association, vol. 73(3), pages 257-276, June.
    5. Gorton, Gary & Winton, Andrew, 2003. "Financial intermediation," Handbook of the Economics of Finance,in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, edition 1, volume 1, chapter 8, pages 431-552 Elsevier.
    6. Sinha, Pankaj & Sharma, Sakshi & Sondhi, Kriti, 2013. "Market Valuation and Risk Assessment of Indian Banks using Black -Scholes -Merton Model," MPRA Paper 47442, University Library of Munich, Germany.
    7. Beyhaghi, Mehdi & D’Souza, Chris & Roberts, Gordon S., 2014. "Funding advantage and market discipline in the Canadian banking sector," Journal of Banking & Finance, Elsevier, vol. 48(C), pages 396-410.
    8. Ehsan U. Choudhri & Lawrence L. Schembri, 2013. "A Tale of Two Countries and Two Booms, Canada and the United States in the 1920s and the 2000s: The Roles of Monetary and Financial Stability Policies," Working Paper series 44_13, Rimini Centre for Economic Analysis.
    9. Walker F. Todd & James B. Thomson, 1990. "An insider's view of the political economy of the too big to fail doctrine," Working Paper 9017, Federal Reserve Bank of Cleveland.
    10. Isabel Schnabel, 2005. "The Role of Liquidity and Implicit Guarantees in the German Twin Crisis of 1931," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2005_5, Max Planck Institute for Research on Collective Goods.
    11. Randall Morck & Gloria Y. Tian, 2015. "Business Groups in Canada: Their Rise and Fall, and Rise and Fall Again," NBER Working Papers 21707, National Bureau of Economic Research, Inc.
    12. Grodecka, Anna & Kotidis, Antonis, 2016. "Double Liability in a Branch Banking System: Historical Evidence from Canada," Working Paper Series 316, Sveriges Riksbank (Central Bank of Sweden).
    13. Selgin, George & Lastrapes, William D. & White, Lawrence H., 2012. "Has the Fed been a failure?," Journal of Macroeconomics, Elsevier, vol. 34(3), pages 569-596.
    14. Chu, Kam Hon, 2015. "Bank consolidation and stability: The Canadian experience, 1867–1935," Journal of Financial Stability, Elsevier, vol. 21(C), pages 46-60.

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