Chapter 7 - Money and the Canadian Banking System

"Profits of Canadian Western Bank rise 37 per cent", CBC News - June 1, 2006

The Canadian Western Bank, based in Edmonton, has been making profit for 72 consecutive fiscal quarters in the past 18 years. This year, in their second quarter, the Canadian Western Bank's profits have risen by 37%, where their net income in this quarter has greatly exceeded their already-strong first quarter's earnings. Their profits rose to $16.7 million, equivalent to $0.52/share, while revenue increase by 20% to $53 million. They continue to have very high levels of business and credit quality within all four of the western provinces that they service to. Insurance profits, banking and trust operations are also continuing to rise. The Canadian Western Bank operates through Canadian Western Trust Co., Valiant Trust Co., and Canadian Direct Insurance Inc. They are very happy to "offer western Canadian customers a high-service, local alternative to larger national financial institutions".

Relation to Chapter 7 - financial institutions

The Canadian Western Bank is a Canadian chartered bank. Acknowledging the fact that the Canadian Western Bank has been making so much profit in the past 18 years, this indicates that they have a reasonable difference between the rate of interest paid to depositors and the rate of interest received on loans, as this difference represents the profits for a chartered bank. However, not all of their profits are based on this, because they also operate through other types of financial institutions, such as trust companies. Although demand and savings deposits are available for trust companies, their major sources of funds are from estates, trusts, and agency accounts. There are benefits to having a variety of chartered banks within Canada. With an increased numbers of banks, there will be competition to keep optimum interest rates for businesses and consumers. People will also be able to choose which financial institution will be most favourable to them.

Chapter 6 - Determination of National Income

"Canada's Economic Growth Slows in Q4", CBC News - February 28th, 2005

In 2004, the fourth quarter of Canada's economy grew at a slower rate than the rest of the year. Statistics Canada reported that the RGDP of the year 2004 had a total increase of 2.8%, rising only 0.4% in the fourth quarter. The previous quarter was at an increase of 0.7%, while the highest increase of the year came from the second quarter, with 1.1%. The annualized growth of the fourth quarter was only 1.7% in Canada, with the majority of the growth coming from domestic demand (with an increase of 1.1%), compared to the U.S.'s annualized growth of 3.8% in the final quarter. Corporate profits within Canada stayed the same as they were in the third quarter, at 1.5%, while exports and manufacturing profits declined. Inventories also rose by $19.2 billion in the final quarter, and businesses increased investments in machinery and equipment by 9.4% as corporate surpluses grew by 17.7%. However, Canadians continued to spend freely, causing the savings rate to decrease to its lowest since the 1930's.

Relation to Chapter 6

As reported by Statistics Canada, Canada's econonic growth has declined to a total growth of 2.8% in the year of 2004. This has been mainly due to the drastic increases in the Canadian dollar, which has caused all of manufacturing, exports, and corporate profits to suffer. Inventories rose by a fairly significant amount, but with the majority of the increase being accounted for by durable goods and wholesale trade and manufacturing. As investment by businesses increased, this would lead to an increase in aggregate demand, which in turn, would cause GDP to increase. Also, as consumers were continuing to spend and not save their income, the profits of financial institutions were harmed. The decrease of the savings rate could also partly be due to the low interest rates during the beginning half of the year, as with low interest rates, the opportunity cost of not saving would be less.