Chapter 12

Nonbank Finance

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Market Share of Financial Intermediaries

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Insurance Companies

Life Insurance Companies1. Regulated by the OSFI and the Canadian Life and

Health Insurance Compensation Corporation (CompCorp)

2. Hold illiquid long-term assets

Property & Casualty Insurance Companies1. Regulated by the OSFI and the Property and

Casualty Insurance Compensation Corporation (PACIC)

2. Hold more liquid assets

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Balance Sheet of Life Insurance Companies

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Balance Sheet of P&C Insurance Companies

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Insurance Management

1. Screening2. Risk-based premiums3. Restrictive provisions4. Prevention of fraud5. Cancellation of insurance6. Deductibles7. Coinsurance8. Limits on amounts of insurance

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Other Institutions

Pension Funds1. Rapid growth: encouraged by tax policy2. Bigger role in stock market3. Problem of underfunding4. Private plans5. Public plans

A. Social SecurityB. CPP and QPP

Finance Companies1. Minimal regulation by provinces2. Rapid growth3. Three types:

A. Sales finance companiesB. Consumer finance companiesC. Business finance companies

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Balance Sheet of Non-Depository Credit Intermediaries

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Other Institutions

Mutual Funds1. Regulated by a variety of agencies, including the OSFI2. Open-end vs. closed-end3. Load vs no-load4. Money Market Mutual Funds

Government Financial Intermediation1. Crown Finance Companies:

CMHC, FCC, EDC, BDC2. Moral hazard problem of government loan guarantees

Securities Market Institutions1. Investment Banks2. Securities Brokers and Dealers3. Organized Exchanges4. All are regulated by provincial securities commissions