To Restrict or not to restrict: a comparative study between financial activities allowed to be carried out by financial institution in Canada and the US

By

ACKNOWLEDGEMENT

I would take this opportunity to thank my research supervisor, family and friends for their support and guidance without which this research would not have been possible.

ABSTRACT

This study will provide the comparative analysis between the financial activities allowed to be carried out by financial institution in Canada and the US should be carried or not. Besides the fact that the U.S. financial crisis has caused serious problems within the country, he influenced the entire world economy and caused the global financial crisis. The aim of the study is to provide the comparative study between financial activities allowed to be carried out by financial institution in Canada and the US. This research is founded on the secondary data. The research encompasses the publications, articles and similar studies accessible on the internet. In recent, financial crises in US demonstrate how the financial institutions are vulnerable. After the collapse of housing market banks in US were hit with massive loans and repossessed assets houses in most cases. The study has certain limitations: this study is based on comparative analysis of only two countries but if we analyze the effect of recession it affected the financial system of the whole world. The recommendations for the study are that there is a need of more policies to be developed which can save the countries from massive destruction.

TABLE OF CONTENTS

ACKNOWLEDGEMENTII

ABSTRACTIII

LIST OF FIGURESVI

CHAPTER 1: INTRODUCTION1

Definition of Topic1

Background of the Study1

Significance of the study2

Research Aims and objectives3

Research Questions3

CHAPTER 2: LITERATURE REVIEW4

Recession in USA4

Financial institutions activities6

Supervisory regime financial institutions in both countries7

Role of financial institutions9

Financial institutions and Laissez-faire approach10

Regulatory bodies and their level of cooperation12

Functioning of financial activities13

Regulation for Credit rating agencies16

Financial regulations in both countries21

American Financial laws21

Canadian Financial laws26

CHAPTER 4: DISCUSSION33

Evolution of banking regulation in the US33

Glass Stegall Act33

Gramm-Leach-Bliley35

Dod Frank Act37

Housing Sector Crises38

Community Reinvestment Act38

Related Cases41

McCulloch vs. Maryland41

Watters v. Wachovia bank43

Cuomo v Clearing House Association, LLC43

Legal factors which lead to success of the Canadian Banking System45

CHAPTER 5: CONCLUSION49

Introduction49

Brief overview of reviews50

Limitations of the study52

Suggestions for further research53

Recommendations54

BIBLIOGRAPHY57

APPENDICES61

LIST OF FIGURES

Figure 1: Implementation of Basel

Figure 2: Regulatory Leverage ratios

Figure3: Capital Asset Ratio

Figure 4: Housing in both countries

CHAPTER 1: INTRODUCTION

Definition of Topic

This study will provide the comparative analysis between the financial activities allowed to be carried out by financial institution in Canada and the US should be carried or not. The scope of the study is based on the recession in US in 2008 and the consequences it laid on the financial sector including Banks. There were many loopholes created at that time which need to be identified. There were many policies used which were learnt from the past crises and these policies led to the changes. The study would also be based on defining the American Financial laws and the Canadian Financial Laws. It will further elaborate the legal implications of financial activities and how these function in both of the ...