The United States has suffered 12 financial crisis since 1840 while Canada has had zero. The Philly Fed looks at why.
Even during the Great Depression, when more than 9,000 of our banks failed, Canada lost a grand total of one — to fraud.
They say that history is a big part of the difference. US banks were prohibited or discouraged from branching in the early days while 6 banks came to dominate the Canadian landscape and that allowed them to absorb shocks.
Overall, they don’t point to any single factor.
There have been many proposed explanations for why our financial system proved much less resilient than Canada’s in 2007 and 2008, from insufficient regulation, to lax mortgage lending, to our history of government rescues. The longer lens of history shows, however, that any one explanation for financial instability — and therefore any one regulatory attempt to fix it — may be too simple.
