Canadian/U.s. Financial Crisis in 2008, Term Paper

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S. banking crisis despite the relations between the two markets has informed debate for quite a while. According to OECD, the recession in Canada was not as serious as it was in U.S. And government bank bailouts as a result of bank failures were largely unheard of (42). This 'unusual' scenario is what has motivated a number of economists to suggest a number of reasons as to why Canada remained relatively stable. To begin with, there have been suggestions that the cause of Canada's stability could have been the significant level of regulation as well as conservatism as compared to the U.S.

The Canadian banking system can be describes as being relatively robust by dint of the diversification as well as size of the financial institutions in the marketplace. The banking system in Canada is also highly regulated (OECD 42). However, when it comes to the U.S., the banking system is largely fragmented in that financial institutions are quite fragile and small.

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Further, it can be noted that unlike in the United States, the Canadian government possesses the power to not only regulate but also charter banks. The U.S. does not have express provisions in the constitution which allow the regulation of banks by the Congress.

Hence in the final analysis, the U.S. banking system appears more fragmented in relation to that of Canada. Hence the more robust and regulated banking system in Canada could have insulated it from the banking crisis that was most severe in the U.S. (OECD 42).

Conclusion

In conclusion, it is important to note that the Canadian banking system's stability cannot be said to be a rare happening. During previous U.S. banking system crises (in the 1920s and between 1863 and 1914), Canada's banking system as far as its stability is concerned was not affected.

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