Abstract
This article identifies several key aspects of the Canadian banking regulatory regime that contribute to its stability. At the same time, it calls into question the current consensus that Canadian banking governance has been uniformly more heavily regulated than that of the United States. It is not the quantity of regulation that matters, but rather the quality. After all, the agents at the heart of the crisis in the United States were themselves highly, if inappropriately, regulated. The banks disclosed the types of instruments they used and quantified their risks. The article proceeds in a context of the overarching question of the ostensible trade-off between financial sector entrepreneurship and innovation on the one hand and stability in banking policy on the other, calling into question the assertions of law-and-economics jurists who argue that the true cost of stability in the financial sector is a less competitive and less dynamic capital market.
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