UBC Theses and Dissertations

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UBC Theses and Dissertations

Banking clearing gains and losses McConachie, Donald Grant

Abstract

This thesis is concerned with a discussion of banking clearing gains and losses. Background material covers the history of deposit banking in general and in Canada, a discussion of deposit expansion for a one and a multi-bank system, and the clearing system in use today by the Canadian Chartered Banks. The background material continues with a discussion of the reserve rate in Canada, the rates of the deposit liability of the Canadian Chartered Banks and the method used to determine the required primary reserve each bank must maintain with the Bank of Canada. In respect to the clearing gain or loss figure for any bank, examples are given to show how the net clearing gain or loss for any bank in the short run can be influenced by the spending habits of the banks' customers, the money market transactions of the bank and its customers, the action of the Bank of Canada and the rate of investment growth for any one bank relative to other banks. In the long run customers loyalty is deemed to be the sole factor having effect upon the net clearing gain and loss figures for any one bank. The conclusion states the following two hypotheses. 1. In the short run, clearing gains and losses for any one bank are a function of: the spending habits of the bank's customers; the money market transactions of the bank and its customers; the action of the Bank of Canada; and, the relative rate of investment growth. 2. In the long run clearing gains and losses are a factor of the customers loyalty enjoyed by each bank. An Appendix explains why these hypotheses were not tested and lists the information that would be needed to test them. J. N. Bray.

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