Why is the canadian banking system more resilient than the U.S. system? a lesson for european competition policy

The work focuses on the United States and the Canadian banking systems regulatory evolutions and assesses the reasons why two so similar countries ended up with such different banking systems. The aim of the paper is to show that Canada has a greater level of stability compared to the United States because in Canada the relationship between competition policy and the financial system has always been more cautious and less procompetitive. Economic history of United States and Canada will be in part addressed to demonstrate that Canada dodging of the 2008 financial crisis was not just a one-time luck. The United States has experienced several financial crises since XIX century whereas the Canadian financial system has always remained sound and stable. Firstly, I suggest that the two major factors which explain this phenomenon are (i) the strong local lobbies which fought the implementation of a centralized banking system in the U.S. and (ii) the more cautious financial and antitrust policies implemented by Canada throughout its history. Secondly, I submit that a banking oligopoly tightly regulated can prove much more effective in maintaining financial stability than a fragmented system of small and fragile entities. The paper concludes showing that the Canadian system represents a positive model to which E.U. policy makers can look to better shape the regulatory framework of the European Banking System.