Comparative Analysis of Business Mechanisms in the USA and Canada A Financial Perspective

Securities laws in the US are controlled by the federal government through the SEC. In Canada, each province is in charge of its own securities markets. As of now, the provinces have not been able to agree on a plan for a national regulator, so the securities markets are regulated by 10 different groups.

In Canada, the federal government has always been in charge of banking regulation.

This means that the Canadian banking market is dominated by a small group of very big "chartered" banks that do business all over the country. In the US, state rules on retail banking for a long time stopped interstate banking and in some states even branch banking. This meant that there were a lot of small regional banks until these rules were overturned in 1994 and the industry began to merge.Canadian banking rules say that banks need to keep more cash on hand and closely watch how mortgages are given out. Some Canadian banks were affected by the US subprime mortgage crisis because they held commercial paper. However, this was lessened because Canada did not allow subprime mortgage loans. Instead, it had a system of mortgage insurance for people just starting out in the market.They are controlled in a lot of the same ways. The law systems of both countries are similar. A lot of American money is invested in Canada's economy, and a lot of Canadian money is invested in the American economy. This is clear from how much the Canadian governments act as U.S. governments' representatives in overseeing the country's financial system.Because of this, Canada now has five very large banks, three more that focus on the regional market, and a lot of single or dual branch offices of big foreign banks. Because there aren't many new banks, the ones that are there are safe, make money, and aren't very competitive. They're more like an oligopoly. The only real competition they have is from credit unions, which are controlled by the province. But most Canadians prefer to do their banking with banks.

The only state where credit unions, especially Desjardins, have a big market is Quebec.

The Canadian banks have a lot of good technology, and debit cards were used a lot even 20 years ago. There is a lot of activity in consumer investment goods, like mutual funds, and exchange trading at all five of Canada's big banks.Any business in Canada that wants to call itself a "bank" has to be "chartered" by the Ottawa-based central government. These are the three "schedules" of banks: I, II, and III. But for our purposes, you only need to deal with "Schedule I" banks. In Canada, you can deposit money at other provincially regulated savings institutions, such as trusts, credit unions, and provincial savings offices (run by the province). These institutions offer many of the same services as banks. However, there are only 23 Schedule I banks, and five of them—Royal Bank, Bank of Montreal, TD Canada Trust, Scotiabank, and the Canadian Imperial Bank of Commerce—control more than 90% of all deposits in the country. You can find these five banks just about anywhere.

Institutions in the US that called themselves banks used to be licensed by the state government.

But back in the 1980s, banks could also get a license from the federal government. These groups are often called "National Associations" or "N.A." States also had rules about other types of banks, like companies and savings and loans. Aside from that, there have always been two kinds of banks: "commercial" banks, which offered checking accounts mostly to businesses, and "savings" banks, which only took deposits. Both types of banks can only lend money in certain ways. For example, savings banks usually can't lend you money for anything other than mortgages, cars, and similar loans. Commercial banks, on the other hand, can also lend money to businesses.

At the time, that means there are 4,236 banks, or banks where the Federal Deposit Insurance Corporation (FDIC) protects deposits. Canada has a guarantee like this, and its name is CDIC. Because of this, most banks only work in one state, and a lot of national banks only work in one area.In the United States, ank fails happen all the time. The FDIC took over three banks that were going bankrupt not long ago. One of them was one of the top twenty banks in the country. In Canada, on the other hand, banks rarely fail. Over thirty years have passed since the last time the CDIC had to take over any kind of bank. There were two "banks" that were taken over, and the last one was forty years ago. It was 1919, the last time savers lost money in a Canadian bank. During the Great Depression, no banks failed in Canada, but hundreds of depositors lost money in the US.

In Canada, banks are closely watched over. The financial crisis of 2007–2008 didn't pose a major threat to any Canadian banks because mortgage lending is strictly regulated in the country. For a short time, Canada did have trouble with some collateralized debt obligation markets, but they were quickly fixed. Canadian banks need a lot of capital, but U.S. banks don't; they have to do a "stress test," but since Trump took office, this rule has been mostly ignored, which is how the problem at Silicon Valley Bank got out of hand.