The Past Speaks

Arnold Kling, a US libertarian economist and blogger, has posted some thoughts about the differences between the US and Canadian banking systems. His conclusions:

1. The best part of Canadian banking is their mortgage design.

2. The worst part of Canadian banking is the high concentration in large banks. As in Europe, this goes along with a very stunted equity market. Firms raise capital using debt, and they owe that debt to big banks. The U.S. system, with its much more prominent stock markets, is better.

3. The worst part of the U.S. financial system is the political power of trade associations and large banks. 

4. Over the last thirty years, we have seen a decline in the relative importance of the stock market in the U.S… Household wealth also has become more highly concentrated.

I’m not at all certain why Kling believes that the greater prominence of the US stock market is a good thing. Anyway, for readers interested in learning more about the comparative evolution of the banking systems of the two countries, I would recommend From Wall Street to Bay Street: The Origins and Evolution of American and Canadian Finance By Christopher Kobrak and Joe Martin

From the publisher’s blurb:
From Wall Street to Bay Street is the first book for a lay audience to tackle the similarities and differences between the financial systems of Canada and the United States. Christopher Kobrak and Joe Martin reveal the different paths each system has taken since the early nineteenth-century.

Joseph E. Martin is the Director of the Canadian Business and Financial History Initiative at the Rotman School of Management as well as President Emeritus of Canada’s History Society.

The late Christopher Kobrak was the Wilson/Currie Chair of Canadian Business and Financial History at the Rotman School of Management as well as a professor emeritus of finance at ESCP, Paris.

Amazon link is here.