Banking System Stability/Fragility: The Roles of Governance and Supervision in Canada and America
By Robert E. Wright, Nef Family Chair of Political Economy, Augustana
University
After surviving the Great Depression, the
Great Recession, and the 75 years in between with barely a discernible scratch,
the Canadian banking system has developed a reputation for stability. The
resilience of Canadian banks after the Panic of 2008 seemed particularly
impressive given the close connection between the Canadian economy and that of
the United States, the epicenter of the financial fiasco.[1] Although Canadian banks’
profitability declined due to the Panic and the recession that followed, losses
were muted compared to banks elsewhere and no recapitalizations or other types
of government bailouts were needed.[2]
Lately, though, the Wall Street Journal has questioned the system’s stability in the
face of Berkshire Hathaway’s private bailout[3] of Canadian subprime
mortgage lender Home Capital Group, a nonbank to be sure, but potentially a
canary in the mortgage mine.[4] Home mortgages currently
compose over 10 percent of the assets of each of Canada’s Big Five banks,
including over thirty percent of CIBC’s and twenty percent of the Bank of Nova
Scotia’s respective portfolios.[5] To ascertain whether Canada’s
banks will remain stable or will crumble in the future, or to help other
nations to reduce the fragility of their own banking systems, the root causes
of the country’s banking stability need to be fully understood.
Superficially, we know that on the eve of
the 2008 crisis the capital (equity/assets) and liquidity (primary and
secondary reserves/debt liabilities) ratios of Schedule I Canadian banks were
not particularly strong relative to banks in other OECD countries, but they
proved to be good enough. What really set the Canadian banks apart was their
higher reliance on consumer deposits, which -- aided by the presence of government
deposit insurance and the widespread and accurate perception that Canadian banks
remained strong -- proved much more stable than the fickle, wholesale funding
that most non-Canadian banks relied upon. So Canadian banks rode out the storm
while troubled OECD banks scrambled first for liquidity and then for capital.[6] What was it, though, that allowed
Canada’s banks to find the optimal point on the security market line, i.e.,
just the right amount of risk and return?
For starters, Canadian banks were not
being hounded by government regulators to lend to poor or disadvantaged groups.
But why was that? In their 2014 opus Fragile
by Design, bank historians Charles Calomiris and Stephen Haber attribute
the stability of Canada’s financial system to a dearth of populism in the Great
White North. Their rich-country model posits that unchecked populism will lead to
lax lending regulations and inadequate capital ratios which lead pretty
inexorably to banking system fragility. The model works extremely well in the
land of zeroes and ones, where in the U.S. populism runs amok but doesn’t in Canada,
and where the U.S. financial system is fragile and Canada’s isn’t. But the real
world is rather more complex than that.
Most importantly, less objective, less
measurable variables, like populism, must be considered with extreme care
because perceptions of them are often colored by salient events. The America of
2017 looks palpably more populist than the America of 2015, for example, but
that is only due to the outcome of the 2016 presidential election, which not
only could have but actually did go the other way in the popular
vote. The America of 2017 may, in fact, be less populist than it was in 2015
due to reactions against Trump’s more extreme policies. But try convincing an
historian of that a century hence.
Measuring international differences in
populism is even more fraught because of differences in customs, languages,
institutions, and politics, or, in short, context. I think a good case could be
made that the median late nineteenth-century Canadian was more Populist than
the median American because a higher percentage of Canadians were engaged in
the primary sector of the economy, the most fertile breeding ground of
Populism. Perhaps Canadians appeared less populist than Americans because they
were quieter as their agendas were carried out much more quickly North of the
border. I used the plural agendas
because Canada was home to at least three distinct Populist movements, one in
the Maritimes, one in Quebec, and one in the West compared to the two, largely
overlapping ones in the U.S. South and Plains. And of course I speak just of
early Populism, not more recent iterations like the Reform Party of Canada. And
that is just big P Populism; small p populism has rendered Canada something
that many Americans consider socialist.
While Canada’s banking system is more stable
than that of the U.S., its record is far from perfect. Canada’s banks, for
example, suspended specie payments during the financial crises and political
uprisings of 1837, 38, and 39 and thereby opened the floodgates to the
circulation of all sorts of American-esque “shin plasters” and other ultimately
worthless monetary tokens.[7] Starting with the panic of
1857, a number of Canadian banks outright failed after investing too heavily in
railroad stocks and western lands. In 1866, the Bank of Upper Canada, the sole fiscal
agent of the government, failed after a decade of difficulties also rooted in
the 1850s boom. The Commercial Bank did likewise, largely because the
similarity of its assets to those of the Bank of Upper Canada ruined all faith
in the institution, which succumbed to a run in 1867.[8] From 1868 until the Great
Depression, another 9 Canadian banks failed and 2 more voluntarily liquidated,
which meant that they had the good sense to wind up their affairs before they
went under. Moreover, twenty-two Canadian banks and trusts failed between 1968
and 1985 and some old timers will tell you that Canada almost had a Savings and
Loan-like crisis.[9]
There were other close calls too. The
Dominion Bank, for example, managed to start a dangerous run on its deposits
when a teller imprudently and loudly told a foreign customer “no money in the
bank” to explain why he could not honor a check on an overdrawn account. At the
urging of Dominion’s competitors, large depositors stayed put and the Ontario government
made a large deposit. The bank was saved and later became the D of TD Bank.[10]
Depositor and noteholder losses generally
ran nil to negligible but clearly the system faced the costs associated with lack
of access. Until the big banks were fully allowed into the mortgage market in
1967, the Canadian mortgage market was smaller than that in the U.S. on a per
capita basis. Most lending was done by individuals or subsidized so-called near
banks, including insurance and trust companies and building socities, and a
government agency. Canada’s mortgage crunch was particulary strong in the
1950s.[11]
Canadians had more bank offices per capita
than Americans did, but finer estimates of the geographical distribution of
offices, say the number of banking offices within a 50-kilometer radius, or the
percentage of the population with at least one banking office within a 20-kilometer
radius, or the percentage of towns with at least x number of inhabitants and at
least one banking office, remains unclear.
Moreover, not until 1936 did a Canadian
bank, CIBC, start to make consumer loans and not until well after World War II
did some banks, like Scotiabank and Royal, enter a field by then well-ploughed
by American banks.[12] Before Canadian banks
entered the consumer banking business in a serious way, loan sharks,
high-priced finance companies, and other “near banks” not subject to usury caps
were rampant.[13]
In short, I do not see much value in
attributing Canada’s relative banking stability to high falutin’ causes like
checks against Populism. Calomiris and Haber are on much firmer ground when
they examine the economic causes of stability, which I summarize as follows:
1) Minimal moral hazard. The
Canadian government long resisted deposit insurance, which essentially forced
larger banks to monitor smaller ones and to share any losses that failed institutions
imposed on depositors. That induced Canada’s biggest banks to seek out and
acquire failing institutions before they expired. Monitoring costs were
relatively low because most banks established branches, if not headquarters,
along St. James Street in Montreal and/or near Bay Street in Toronto. Moreover,
bankers regularly mingled in social activities, including a wicked bank hockey
league.[14] The Canadian government also
refused to use public money to pay off bank creditors or stockholders (except in
one instance where it found a government regulator at fault for not responding
to depositor complaints and warnings in a timely fashion). In short, Canadian
bankers have very little expectation of being bailed out by the government and reduce
their risk-taking accordingly.
2) Constant legislative monitoring.
Unlike in the U.S. in the twentieth century, the charters of Canadian banks
must be renewed periodically and the government reviewed banking legislation
every decade and now reviews it every five years. That gives banks a strong
incentive to behave, lest the government make drastic reforms or refuse to
re-charter a bank altogether.[15] Moreover, regulators can
be captured or at least co-opted with relative ease compared to Parliament,
especially the popularly-elected Commons. While the threat of legislation is
ever-present in the United States, Congress is typically reactive, implementing
new regulations only after crises, as with FIRREA after the S&L crisis and
Dodd-Frank after the 2008 fiasco. It generally passes de jure deregulation only after deregulation has already been
established de facto, as was the case
with both interstate branching and repeal of Glass-Steagall.
What Calomiris and Haber missed is
the superior governance of Canadian banks. They take governance for granted,
assuming that the incentives of stockholders and managers are always
consistently aligned. That was not the case in the United States in the years
leading up to the Panic of 2008, when bank executives regularly received “heads
I win, tails I win” contracts.
To understand the governance of Canadian
banks, we need to go back to the beginning, when Benjamin Franklin, Alexander
Hamilton, and other U.S. founding fathers said let there be corporations, and
there were. And lo’ they were good because they were well-governed, so
well-governed that over 20,000 times before 1861 Americans invested in the shares,
well, options on the shares, of startup businesses, most which were completely
devoid of any operating histories. Investors feared not the expropriation of
their resources because as stockholders they had the power, in the form or
sundry checks and balances too numerous and mundane to comprehensively discuss here,
to stop managerial self-dealing, whether the company was a turnpike, a manufacturer,
or a bank. Provisions in many early bank charters and by-laws mandated that
directors not be bankrupt and that much of their wealth be invested in their respective
bank’s stock, which of course aligned their incentives closely with those of their
bank.[16]
According to banking historians Adam
Shortt and Bray Hammond, Canada essentially imported its bank governance from
the United States, specifically from Alexander Hamilton, who was a great
stickler for governance checks and balances and the primary author of at least
four early, seminal corporate charters, those of the Bank of New York, the Bank
of the United States, the Society for the Establishment of Useful Manufactures,
and the Merchants Bank of New York. From Hamilton, for example, came the notion
of prudent mean voting rules that restricted the voting power of the largest
shareholders so that minority holders would have some board representation, which
tended to keep managerial self-dealing in check.[17]
As with many converts, Canadians were more
stalwart in their convictions than the original acolytes themselves as the
Canadians witnessed, and learned from, the banking excesses that infected early
America. Their first banking charters copied that of the Bank of the United
States (BUS), which of course Hamilton designed to function as a large bank
with multiple branches spread across the nation, almost verbatim. The first
permanent commercial bank in Canada, the Bank of Montreal, which was
established in 1817, sent key men to study the operations of the second Bank of
the United States, a huge nationwide bank with branches modeled after the first
Bank. The Bank of Canada, established in Montreal the following year, utilized
the same BUS charter and was formed with American capital. It soon failed,
however, and was absorbed by the more conservatively run Bank of Montreal, a
pattern that repeated itself throughout Canadian history. Other competitors,
like the Royal Bank, thrived in part by emulating, and snatching executives and
other talent away from the Bank of Montreal, Commerce, and other leading
Canadian banks.[18]
Two other circumstances helped to get
early Canadian banks on the straight and narrow. First, the agricultural Québécois or
habitans distrusted non-specie forms
of money so intensely that they quickly redeemed any bank notes that fell to
them in the course of business. That, in turn, taught bankers to maintain
conservative reserve levels. Second, the imperial overlords in London had
something to say about colonial banking regulations and they, as a matter of
course, stressed conservative banking practices.[19] Their goal, after all,
was to extract rents from their colonies, not to speed their economic
independence.[20]
They explicitly looked at the U.S. experience to learn what could go wrong and
built safeguards into the Privy Council for Trade’s 1830 colonial banking
guidelines. Capital was to be at least half paid in before operations could
begin, insider lending was limited to one-third of each bank’s resources,
weekly balance sheets were to be published and verified under oath,
stockholders were under double liability, lending on the collateral of real
estate or the bank’s own stock was strictly prohibited, directors had to have
substantial investments in their banks, and so forth.
From both Hamilton and the Scots came the
notion that fewer, larger banks were preferable to smaller, more numerous
banks. Bigger banks would attract better qualified employees at the higher
echelons of the bank, allowing for more professional management. The assets of
bigger banks also tended to be more diversified geographically and by economic
sector, and hence naturally more stable. Because of its belief in Hamiltonian
big banks, Canada made banking a national prerogative rather than a provincial
one, or both national and provincial as the United States did. Fewer banks
chartered by fewer jurisdictions meant less experimentation, less opportunity
for regulatory arbitrage, and more uniformity around best practices. So unlike
in some U.S. jurisdictions, such as Massachusetts, where banks were encouraged
to proliferate in order to swell state tax revenues, but like other U.S.
jurisdictions, such as New York, where new banks were not encouraged until late
in the 1830s, Canadian lawmakers had relatively little reason to pass new
banking charters and relatively more reason to encourage existing banks to
establish agencies or full blown branches in growth areas.[21]
In short, path dependence and original
obedience, the opposite of original sin, are more important than populist
influences as an explanation of Canadian banking system stability. Basically,
Canada took a free ride on U.S. banking system experimentation, adopting the
Hamiltonian best and rejecting the populist rest.[22] And the Hamiltonian best
stuck. The Canadian Bank of Commerce, for example, mandated in its new 1909
by-laws that directors had to remain solvent and own at least 100 shares of
stock in order to keep their positions. The by-laws also maintained the old
bonding rules, restrictions on outside employment/business, and 360 degree employee
monitoring mechanisms common in early nineteenth century U.S. bank charters and
by-laws.[23]
Bank historians have often attributed
Canada’s relatively good economic showing during the Great Depression to its
branch banking system. Unlike in the United States, the right to establish
branches was explicit in many early provincial bank charters and sometimes
informally considered acceptable even if not explicitly authorized until 1841,
when the right to branch was formally recognized. By 1929, Canada had only 11
banks, down from its apex of 41 in 1885-86, and the top four controlled 77 of
the country’s banking assets. As noted previously, a few banks failed but most
exited by selling themselves to larger banks when they realized that they could
not earn competitive profits.[24] California, the only
large state that allowed intrastate branching before the Depression, also did
relatively well during the downturn, leading many to conclude that bigger banks
are more stable banks.
What is often overlooked, however, is that
Canada went off gold de facto before
the Great Depression began, as proven by the U.S.-Canadian dollar exchange
rate, which violated Canada’s specie export point starting in 1929.[25] That was possible because
Canada’s Department of Finance stopped redeeming Dominion notes in gold because
it was running out of the precious yellow stuff quite apart from the Depression.[26] As Ben Bernanke and other
researchers have shown, devaluation or abandonment of the gold standard was the
key to recovery so Canada’s relative economic success in the 1930s is
unsurprising and, again, quite unrelated to populism.
Another fact that is often overlooked is
that Canada lost many of its bank branches during the Depression as the big
banks colluded to decrease competition. The CIBC alone shuttered over 130
branches and ceased lending on the prairies and in Newfoundland. Royal Bank and
all the other biggies shuttered about ten percent of their domestic branches on
average and even the hoary Bank of Montreal eased off many of its foreign
committments.[27]
Canada’s big banks wobbled, as one bank historian put it, but they did not
topple. That same historian admitted, however, that it was a close thing.[28] Bank dividends shrank
throughout the Depression and were not as large as they seemed as they were
based on the par value of stock, usually $100, when market prices for most big
banks were in the $300 range. In addition, the number of employees shrank, as
did average earnings per employee.[29]
Moreover, two of the country’s three
regional clearinghouses closed, leaving all clearing to be done in Toronto. The
banks experienced runs in Alberta, though due to some kooky provincial credit
experiments rather than any question of the banks’ ultimate solvency. I say
ultimate because there was clearly some regulatory forbearance going on as
Canadian banks kept accounts on lifelines – the bank histories all tell similar
stories about being unable to collect old debts, especially from farmers[30] -- rather than marking
them to market or writing them off. (Not that the accounting would always have
been straightforward, as in the case of a CIBC branch manager and employee who
accepted 12 live turkeys in payment of a farmer’s $25 note. After ruining their
clothes and three hours, they realized only $12 for the plucked birds, mostly
from other bank employees.[31])
Moreover, an Order-in-Council issued on 27
October 1931 allowed banks to value securities, including equities, at the
lower of book value or their market price on 31 August of that year, i.e.,
before the great shock of 20 September when Britain went off gold. No Canadian
bank admitted getting much relief from the measure but that it was promulgated
at all is telling. A similar edict saved many U.S. life insurers from, if not outright
bankruptcy, considerable embarrassment. Moreover, the Royal Bank, and
presumably others, created secret shell companies to buy the bank’s own stock
from its debtors, at above market prices, and to buy the securities of
defaulting borrowers. Those entities, essentially bad banks, were ultimately funded
by Royal but their obligations looked a heck of a lot better on Royal’s balance
sheet than old unpaid loans owed by insolvent debtors did![32]
The notion that bigger is better in
banking was reinforced by the S&L crisis in the United States in the 1980s
but of course the fact was always contested by those who worried about banks’
market power and diseconomies of scale. Effectively monitoring far flung
branches was particularly difficult and not just for technological reasons.
When branches audited each other, for example, they had a tendency to go easy in
expectation of reciprocity. Inspectors would be certain to check into their
hotels and grab a meal, and maybe a night’s sleep, before starting an
inspection, giving the local manager time to clean up the books, which at first
were kept in an idiosyncratic manner.[33]
The notion that bigger is better was
shattered by the subprime crisis and subsequent global financial panic. While
small banks did not fare well during the post-panic recession, they clearly did
not cause the financial conflagration, the big boys did. The American big boys, not the Canadian
ones. Canadian banks were under a different, ostensibly more stringent
regulatory system but as we all know regulations can be gamed and loophole
mined almost to the point of irrelevance if bankers wish to do so. But in
Canada, bankers tend to take one of the safer paths because Canadian bank
governance structures are much robust than those in the United States, the
checks and balances of which adapted to changing circumstances but ultimately degenerated
over the course of the twentieth century. In fact, U.S. bank governance was
actually weaker than the governance of U.S. non-financial corporations
according to corporate activists like Wilma Soss.[34]
Canadian banks did not witness the same
degree of degradation of stockholder rights because:
1. Canadian
bank stockholders were subject to double liability when Canadian banks could
issue bank notes, which was all of the nineteenth century up to 1944, nine
years after the establishment of Canada’s first central bank. When coupled with
Canada’s no bailout policy, double liability incentivized stockholders to monitor
management carefully and to keep shareholder rights strong. Stockholders, not
government regulators, audited (or paid to have audited) their banks’ books.
2. Canada’s
big, nationwide banks are valuable franchises that both managers and
stockholders wish to protect.[35] Despite substantial
restrictions on the activities of foreign banks operating in Canada, that value
has come from economies of scale rather than market power. That means that
Canadian bankers traditionally have not looked to merge in order to charge
borrowers more, as interest rates were longed capped in the 6 to 7 percent
range anyway. They also did not strive to pay depositors less, as Canadian depositors
received more on average than American depositors did. Rather, Canadian bankers
merged in order to render their banks safer and more efficient, not bigger per
se.[36]
Due to relatively strong stockholder
monitoring, Canadian bankers have not had the incentive or ability to write
themselves the ridiculous sort of “heads I win, tails I win” incentive
contracts that became au courant
south of the border around the turn of the last century. Most directors were
outside directors, i.e., not employees of the bank, and would not countenance
such tomfoolery. Of the 32 directors in Scotiabank in 1960, for example, 17
represented borrowers, 4 were lawyers, 2 were financial men. Two more were
elder statesmen and 4 were old connections, leaving only 3 as active bank
managers.[37]
Stockholders and other stakeholders can
also vote with their feet so to speak. Henry Stark Howland left a vice
presidency at the Canadian Bank of Commerce in 1874 when he thought that the
bank was growing too quickly and recklessly. He had a lot of capital at stake,
capital that he withdrew and put into a more conservative de novo bank called
the Imperial Bank of Canada. In typical Canadian fashion, the two institutions
merged in 1960 to form the CBIC.[38]
Populists don’t understand the importance
or intricacies of corporate governance so it is difficult to believe that they
had much if anything to do with the relative strength of Canadian and American
bank governance. Americans complain about high executive pay but they don’t see
that what is really key is the structure of incentives.[39] If bank executives are
allowed to write themselves “heads I get a huge immediate bonus; tails I get a very
generous golden parachute”-style contracts, they are bound to take on large
risks with other peoples’ money. If instead they face the choice of “heads I
get a reasonable deferred bonus; tails I get fired” contracts, they would
behave much more prudently, like U.S. investment banks did before they went
public and like Canadian banks still do. Canadian companies are much more
likely than American ones to use compensation consultants who, while still
beholden to executives, are less likely to okay irrational executive
compensation packages. Canada also generally has better executive pay
disclosure rules that make it easier for individual and institutional
stockholders and the media to monitor executive pay packages.[40] A comparative study of
performance-based pay in the U.S. and Canada concluded that the boards of
widely-held Canadian corporations have less ability to monitor Canadian
executives but more power over their compensation packages.[41]
Finally, and perhaps most importantly,
Canada’s principle-based regulatory system is a better bulwark against
rent-seeking behaviors than America’s rule-based system is. In Canada, “heads I
win big; tails I win bigger” contracts are obviously wrong, immoral, unlawful,
and suboptimal. In America, they were not illegal and hence justifiable in some
rarified ethical sense.[42] Hence much of the “say on
pay” revolution has focused not on executive pay but the pay process in order
to prevent “extraordinary compensation items (e.g., large golden parachutes)”
and to allow clawback of executive bonus compensation after financial restatements
and the like.[43]
In short, Canada’s banking system
stability is impressive relative to that of the U.S. but still far from
perfect. Its relative stability is rooted in fundamentals, especially strong
stockholder governance and sensible supervision, rather than populism.
Thank you!
Notes
[1]
Lev Ratnovski and Rocco Huang, “Why Are Canadian Banks More Resilient?”, IMF
Working Paper (2009), 3.
[2]
For more about bailouts, see Robert E. Wright, ed. Bailouts: Public Money, Private Profit (New York: Columbia
University Press, 2010).
[3]
Jacquie McNish and Nicole Friedman, “Berkshire Rescues Mortgage Lender,” Wall Street Journal (23 June 2017),
B1-B2.
[4] R.
M. Macintosh, “The Bank Act Revision of 1954,” in E. P. Neufeld, ed., Money and Banking in Canada (Toronto:
McClelland and Stewart, 1967), 299-307.
[5]
Aaron Back, “Housing Haunts Canadian Banks,” Wall Street Journal (26 May 2017), B12.
[6]
Lev Ratnovski and Rocco Huang, “Why Are Canadian Banks More Resilient?”, IMF
Working Paper (2009), 3-4, 18.
[7]
Adam Shortt, “Commercial Crisis of 1837-38,” in E. P. Neufeld, ed., Money and Banking in Canada (Toronto:
McClelland and Stewart, 1967), 91-94, 173.
[8] in
E. P. Neufeld, ed., Money and Banking in
Canada (Toronto: McClelland and Stewart, 1967), 132-48.
[9]
Charles Calomiris and Stephen Haber, Fragile
by Design: The Political Origins of Banking Crises and Scarce Credit
(Princeton: Princeton University Press, 2014), 315 n.65, 324.
[10]
Joseph Schull, 100 Years of Banking in
Canada: A History of the Toronto-Dominion Bank (Toronto: Copp Clark
Publishing, 1958), 132-35.
[11]
Duncan McDowall, Quick to the Frontier:
Canada’s Royal Bank (Toronto: McClelland & Stewart, Inc., 1993), 333-34.
[12]
Joseph Scull and J. Douglas Gibson, The
Scotiabank Story: A History of the Bank of Nova Scotia, 1832-1982 (Toronto:
Macmillan of Canada, 1982), 208; Duncan McDowall, Quick to the Frontier: Canada’s Royal Bank (Toronto: McClelland
& Stewart, Inc., 1993), 325.
[13]
Arnold Edinborough, A History of the
Canadian Imperial Bank of Commerce, Vol. IV, 1931-1973 (Toronto: Canadian
Imperial Bank of Commerce, 1995), 45; Duncan McDowall, Quick to the Frontier: Canada’s Royal Bank (Toronto: McClelland
& Stewart, Inc., 1993), 331-32.
[14]
Duncan McDowall, Quick to the Frontier:
Canada’s Royal Bank (Toronto: McClelland & Stewart, Inc., 1993), 58,
106-10.
[15]
E. P. Neufeld, “Introduction” and R. M. Macintosh, “The Bank Act Revision of
1954,” in E. P. Neufeld, ed., Money and
Banking in Canada (Toronto: McClelland and Stewart, 1967), 5-6, 299-307.
[16]
For more, and for copious documentation, see Robert E. Wright, Corporation Nation (Philadelphia:
University of Philadelphia Press, 2014) and Robert E. Wright, “Devolution of
the Republican Model of Anglo-American Corporate Governance,” Advances in Financial Economics Vol. 18
(2015): 65-80.
[17]
Bray Hammond, Banks and Politics in
America: From the Revolution to the Civil War (Princeton: Princeton
University Press, 1957), 631-670.
[18]
Duncan McDowall, Quick to the Frontier:
Canada’s Royal Bank (Toronto: McClelland & Stewart, Inc., 1993), 59.
[19]
R. M. Breckenridge, “Imperial Regulation of Colonial Bank Charters,” in E. P.
Neufeld, ed., Money and Banking in Canada
(Toronto: McClelland and Stewart, 1967), 87-90.
[20]
For more on this point, see Wadan Narsey, British
Imperialism and the Making of Colonial Currency Systems (Basingstoke:
Palgrave Macmillan, 2016).
[21]
J. Wallis, R. E. Sylla, and J. B. Legler, “The Interacton of Taxation and
Regulation in Nineteenth Century U.S. Banking,” in C. Goldin and G. D. Libecap,
eds., The Regulated Economy: A Historical
Approach to Political Economy (Chicago: University of chicago Press),
122-44.
[22]
Adam Shortt, “Origin of the Canadian Banking System,” in E. P. Neufeld, ed., Money and Banking in Canada (Toronto:
McClelland and Stewart, 1967), 77-86.
[23] By-Laws and Regulations of the Canadian Bank
of Commerce (1909), 3.
[24]
B. H. Beckhart, “Fewer and Larger Banks,” in E. P. Neufeld, ed., Money and Banking in Canada (Toronto:
McClelland and Stewart, 1967), 196-205.
[25]
C. A. Curtis, “The Canadian Monetary Situation,” in E. P. Neufeld, ed., Money and Banking in Canada (Toronto: McClelland
and Stewart, 1967), 218-222.
[26]
Merrill Denison, Canada’s First Bank: A
History of the Bank of Montreal (Toronto: McClelland & Stewart, 1967),
2:364-65.
[27]
Merrill Denison, Canada’s First Bank: A
History of the Bank of Montreal (Toronto: McClelland & Stewart, 1967),
2:378-80.
[28]
Duncan McDowall, Quick to the Frontier:
Canada’s Royal Bank (Toronto: McClelland & Stewart, Inc., 1993), 247.
[29]
Joseph Scull and J. Douglas Gibson, The
Scotiabank Story: A History of the Bank of Nova Scotia, 1832-1982 (Toronto:
Macmillan of Canada, 1982), 153-54; Merrill Denison, Canada’s First Bank: A History of the Bank of Montreal (Toronto:
McClelland & Stewart, 1967), 2:368.
[30]
See, for example, Duncan McDowall, Quick
to the Frontier: Canada’s Royal Bank (Toronto: McClelland & Stewart,
Inc., 1993), 245-46, 249-50.
[31]
Arnold Edinborough, A History of the
Canadian Imperial Bank of Commerce, Vol. IV, 1931-1973 (Toronto: Canadian
Imperial Bank of Commerce, 1995), 23-25, 31, 36-37, 53, 173.
[32]
Duncan McDowall, Quick to the Frontier:
Canada’s Royal Bank (Toronto: McClelland & Stewart, Inc., 1993),
260-61.
[33]
D. Hughes Charles, “Reminiscences of Bankers,” in E. P. Neufeld, ed., Money and Banking in Canada (Toronto:
McClelland and Stewart, 1967), 178-82.
[34]
Pocketbook News, 8 January 1961, Box 8, Wilma Soss Papers, University of
Wyoming, Laramie, Wyoming.
[35]
Lev Ratnovski and Rocco Huang, “Why Are Canadian Banks More Resilient?”, IMF
Working Paper (2009), 17.
[36]
The stockholders of the three major banks to amalgamate with Scotiabank, for
example, all feared the bit of double liability as they monitored the
lackluster performance of their banks. See, Joseph Scull and J. Douglas Gibson,
The Scotiabank Story: A History of the
Bank of Nova Scotia, 1832-1982 (Toronto: Macmillan of Canada, 1982),
338-39.
[37]
Joseph Scull and J. Douglas Gibson, The
Scotiabank Story: A History of the Bank of Nova Scotia, 1832-1982 (Toronto:
Macmillan of Canada, 1982), 222, 333, 400-403.
[38]
Arnold Edinborough, A History of the
Canadian Imperial Bank of Commerce, Vol. IV, 1931-1973 (Toronto: Canadian
Imperial Bank of Commerce, 1995), 163-66.
[39]
Anthony J. Crawford, John R. Ezzell, and James A. Miles, “Bank CEO
Pay-Performance Relations and the Effects of Deregulation,” Journal of Business 68, 2 (April 1995):
231-56; Nuno Fernandes, Miguel Ferreira, Pedro Matos, Kevin J. Murphy, “Are
U.S. CEOs Paid More? New International Evidence,” Review of Financial Studies 26, 2 (February 2013): 323-67; Edward
M. Iacobucci, “The Effects of Disclosure on Executive Compensation,” University of Toronto Law Journal 48, 4
(Autumn 1998): 489-520.
[40]
Edward M. Iacobucci, “The Effects of Disclosure on Executive Compensation,” University of Toronto Law Journal 48, 4
(Autumn 1998): 496, 502
[41]
Michael L. Magnan, Sylvie St-Onge, and Linda Thorne, “A Comparative Analysis of
the Determinants of Executive Compensation between Canadian and U.S. Firms,” Industrial Relations 50, 2 (Spring
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[42]
Bo James Howell, “Executive Fraud and Canada’s Regulation of Executive
Compensation,” University of Miami
Inter-American Law Review 39, 1 (Fall 2007), 122, 141.
[43]
Yonca Ertimur, Fabrizio Ferri, and Volkan Muslu, “Shareholder Activism and CEO
Pay,” Review of Financial Studies 24,
2 (February 2011), 538, 543, 566, 579.
