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HomePolicy Articles Article Summary

Bank Mergers: Why We Need Them, How to Get Them

Backgrounder by David Bond

In this backgrounder David Bond argues that the financial services sector, especially banks, is so central to our lives and well-being that any breakdown in its operation can have severe ripple effects on the entire economy. He suggests, however, that for most of Canada’s history, the financial services sector has been largely at the disposal of governments, which have been intent to use the sector to meet special interest demands.

Bond argues that in the 21st century, the federal government will have to allow banks and other financial institutions to take actions (including allowing them to merge), which are in the interests of their respective shareholders. Bond contends the federal government must adopt a policy that would preserve its public policy objectives without blocking the ‘rationalization’ of the banking system – allowing it to be efficient, stable, and innovative.

Bond argues that a prosperous and competitive financial services sector will generate substantial direct and indirect employment in the banking industry, as well as others. To avoid unintended distortions, he suggests that policy should focus on the development of regulations to ensure stability and security, and should avoid loading the sector with additional regulatory burdens that other sectors of the economy are not required to meet.

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Policy Publication Details

Author(s): David Bond;
Publisher: C.D. Howe Institute [ Visit Website ]
Year Published: 2003; Publisher Type: Research Institute
Publicly Available: Yes Research Focus: National;
Registration Required: Yes Language: English
Payment Required: No Publication Format: Adobe PDF

Subjects / Categories:

Policy Articles / Monetary & Capital Management / Bank Mergers
Policy Articles / Monetary & Capital Management / Bank Mergers / 2003
Policy Articles / Monetary & Capital Management

Keywords / Tags:

financial services sector; bank mergers; government regulations; financial institutions; shareholders; banking system; competition;