The economics of money, banking, and financial institutions 2nd ch12
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Chapter 12
Nonbank Finance
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Market Share of Financial Intermediaries
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Canada Inc.
12-2
Insurance Companies
Life Insurance Companies
1. Regulated by the OSFI and the Canadian Life and
Health Insurance Compensation Corporation
(CompCorp)
2. Hold illiquid longterm assets
Property & Casualty Insurance Companies
1. Regulated by the OSFI and the Property and
Casualty Insurance Compensation Corporation
(PACIC)
2. Hold more liquid assets
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Canada Inc.
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Balance Sheet of Life Insurance
Companies
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Canada Inc.
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Balance Sheet of P&C Insurance
Companies
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Canada Inc.
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Insurance Management
1.
2.
3.
4.
5.
6.
7.
8.
Screening
Risk-based premiums
Restrictive provisions
Prevention of fraud
Cancellation of insurance
Deductibles
Coinsurance
Limits on amounts of insurance
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Canada Inc.
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Other Institutions
Pension Funds
1. Rapid growth: encouraged by tax policy
2. Bigger role in stock market
3. Problem of underfunding
4. Private plans
5. Public plans
A. Social Security
B. CPP and QPP
Finance Companies
1. Minimal regulation by provinces
2. Rapid growth
3. Three types:
A. Sales finance companies
B. Consumer
finance companies
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Education
C. Business finance companies
Canada Inc.
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Balance Sheet of Non-Depository
Credit Intermediaries
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Canada Inc.
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Other Institutions
Mutual Funds
1. Regulated by a variety of agencies, including the OSFI
2. Openend vs. closedend
3. Load vs noload
4. Money Market Mutual Funds
Government Financial Intermediation
1. Crown Finance Companies:
CMHC, FCC, EDC, BDC
2. Moral hazard problem of government loan guarantees
Securities Market Institutions
1. Investment Banks
2. Securities Brokers and Dealers
3. Organized Exchanges
4. All are regulated by provincial securities commissions
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Canada Inc.
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