The Canadian Banking System

This paper examines the major changes in the Canadian banking system since the Second World War, with special attention paid to the differences between Canadian and U.S. developments over this period. An important difference between the countries is the nationwide branch banking arrangements in Canada. Two other differences are a result of regulatory dimensions of the Canadian scene: periodic reassessment and updating of banking legislation as a legislative requirement; and the absence of any ceilings on interest rates on deposits or, since 1967, on loans. The amendments to the Bank Act from 1954 to 1997 are examined, and significant developments in the Canadian financial system, typically associated with changes to legislation governing banks and other financial institutions, are discussed. The effects of these changes are then looked at, including the market share of banks in various markets, and the developments in money market mutual funds and mortgage securitization in Canada and the United States.