The Canadian Keiretsu

Abstract:     
This Article describes the Canadian Keiretsu, in which a main Chartered Bank dominates an interlocking group of clients, investment dealers, trust companies, and professional advisors. The keiretsu facilitates information-sharing and monitoring strategies amongst group members, and also reduces the agency costs of banker misbehavior. Most major Canadian firms are members of a keiretsu, and the Canadian economy is far more concentrated than that of the United States. The difference is attributable to the less restrictive banking and bankruptcy laws of Canada, and ultimately to a distinctly non-populist historical experience.

JEL Classification: G32, G34

working papers series