Banking Industry in Canada VS USA

The Commercial Banking Industry in Canada is less competitive than the Commercial Banking Industry in America. “YES or NO”

The Commercial Banking Industry in Canada is less competitive than the Commercial Banking Industry in America because in Canada only few large banks dominate the industry while in the United States there are around 10,000 commercial banks. As there are approximately 10,000 commercial banks in the United States, a number that is much larger than in most other industrialized countries. There are the largest financial intermediaries in the United States. Most of them, however, are very small—almost 67 percent of commercial banks in the United States have assets of less than 100 million dollars, and another 26 percent of them have assets between 100 and 500 million dollars. Only a little over 4 percent of the banks have assets over one billion dollars. Despite the large number of banks in the U.S. banking industry, larger banks do hold a giant share of the industry assets. In 1995, the top 4.3 percent of banks (with assets of $1 billion or more) hold nearly 53 percent of all bank assets.

On the other hand, in case of Canada, there are far fewer banks—typically; five or fewer banks dominate the banking industry.  Small group of commercial banks accounts for most of the banking business. By contrast, in the United States, the ten-largest banks together hold only about one third of the industry assets. This characteristic of the banking industry sets it apart from other industries in the United States.

Furthermore, potential demand in Canada was not significant enough during last decade to make the whole system more competitive.