A Comparison of the Stability and Efficiency of the Canadian and American Banking Systems 1870-1925

41 Pages Posted: 8 Mar 2000 Last revised: 9 Sep 2010

See all articles by Michael D. Bordo

Michael D. Bordo

Rutgers University, New Brunswick - Department of Economics; National Bureau of Economic Research (NBER)

Angela Redish

University of British Columbia (UBC) - Department of Economics; National Bureau of Economic Research (NBER)

Hugh Rockoff

Newark College of Arts & Sciences - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: November 1996

Abstract

In this paper we compare the performance of the U.S. and Canadian banking systems from 1870-1925 in terms of stability and efficiency. In an earlier study we found that the Canadian banking system, based on nationwide branch banking, dominated the U.S. system, based on unit banking, on both criteria in the period 1920-1980. In this study we find that there is little significant difference between the two systems in the preceding 50 years. The difference between the two periods we attribute to the merger movement in Canada after 1900 which allowed the Canadian banking system to evolve from a system with incomplete regional diversification, and hence subject to a significant risk of an occasional failure by a large bank, to one characterized by national diversification and greater stability. The greater stability in turn allowed the financial structure of the banking system to evolve in a more efficient direction.

Suggested Citation

Bordo, Michael D. and Redish, Angela and Rockoff, Hugh T., A Comparison of the Stability and Efficiency of the Canadian and American Banking Systems 1870-1925 (November 1996). NBER Working Paper No. h0067. Available at SSRN: https://ssrn.com/abstract=190404

Michael D. Bordo (Contact Author)

Rutgers University, New Brunswick - Department of Economics ( email )

New Brunswick, NJ
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Angela Redish

University of British Columbia (UBC) - Department of Economics ( email )

997-1873 East Mall
Vancouver, BC V6T 1Z1
Canada
604-822-2748 (Phone)
604-822-5915 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Hugh T. Rockoff

Newark College of Arts & Sciences - Department of Economics ( email )

360 ML King Jr. Blvd.
Newark, NJ 07102
United States
732-932-7857 (Phone)
732-932-7416 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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