The IMF has just published a paper entitled “Why Are Canadian Banks More Resilient?” available here.
Canadians at large have themselves to thank, rather than the bank executives or the Harper government for the resilience of the Canadian banks during the recent financial meltdown, as the IMF concluded that the single most important thing that distinguished Canadian banks from their international peer group during was the extent to which Canadian banks are funded by their depositors (i.e. Canadians at large) versus funded by wholesale sources.
The conclusion of the report reads:
The paper analyzed pre-crisis balance sheet structural fundamentals of Canadian banks and compared them with banks in other OECD countries. We found that ample retail depository finding was the key factor behind the relative resilience of Canadian banks during the turmoil. Sufficient capital and liquidity were also important but played a less distinctive role. In addition, a number of regulatory and structural factors have reduced Canadian banks’ incentives to take risks. Results allow a conjecture that strong structural fundamentals of Canadian banks will remain a source of their resilience as the financial turmoil and economic recession persist.
Wednesday, July 22, 2009
Posted by Fillibluster at 8:52 AM