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Canadian Banking System vs Amerian Essay

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Below is an essay on "Canadian Banking System vs Amerian" from Anti Essays, your source for research papers, essays, and term paper examples.

The latest recession has shown the world that no economy is stable. The global power house that is the United States was damaged so critically that it still continues to recover to this date. Other areas of the world such as Europe are still feeling the effects of the recession and there immense amount of debt has led the world to and unbalanced point. The Canadian economy was the least affected by this economic decline. Comparison of mortgages and methods of diversification and concentration used in Canadian and U.S. banking systems helps one understand why the Canadian economy survived the recession, and ultimately why it is the superior banking system.
Canada remains the only industrialized country in the world that has survived the last two years of financial and economic stress without a single bank failure. One of the key reasons for Canada’s banking system being dominant to that of its counterpart United States is their lending regulations, specifically in the housing and mortgage market. U.S banking policies also lean towards encouraging borrowers where as Canadian regulators lean towards making sure lenders are sound. In the Untied States, loan originations by mortgage brokers was at a substantial 70% before the economic crisis vs. Canada’s being at only 35%. During the housing boom of 2006/2007, American banks were blinded by optimism in the currently prosperous housing market and wanted to loan out as much money as possible. Loans were being granted with lower-than-market interest rates to anyone and everyone, regardless of their income and ability to repay the loan. In Canada however loans are always granted with prudence on an individual, case by case basis. Along with this, U.S banks had a mix of recourse and non- recourse laws which differ depending on the state. In other words if the borrower is forced to foreclose, it is the banks problem and not so much the borrowers. While up north in Canada mortgage are “full recourse” loans meaning that the...

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Canadian Banking System vs Amerian. Anti Essays. Retrieved December 12, 2018, from the World Wide Web: http://snehaedu.com/free-essays/Canadian-Banking-System-Vs-Amerian-358277.html