Innovation Nation: How Canada’s banks are holding back the knowledge economy

Policy decisions taken over decades have created a Toronto-based oligopoly of five institutions that controls 85 per cent of all banking assets.Illustration by Brice Hall/National Post

Canada has a rich history of innovation, but in the next few decades, powerful technological forces will transform the global economy. Large multinational companies have jumped out to a headstart in the race to succeed, and Canada runs the risk of falling behind. At stake is nothing less than our prosperity and economic well-being. The Financial Post set out explore what is needed for businesses to flourish and grow. You can find all of our coverage here.

Would you lend money to an outfit called Wrnch Inc.? Probably not if your business model has for centuries been based on prioritizing companies with names such as McCain Foods Ltd., Hudson’s Bay Co., Canadian Pacific Railway Ltd. and Teck Resources Ltd.

Big-name enterprises like these form the foundation on which the modern financial industry is built. They have little difficulty getting loans because they have lots of hard assets — factories, inventories, real estate, equipment — to put up as collateral.

From a macroeconomic perspective, there is nothing wrong with such an approach to lending, provided the economy revolves around those same tangible goods.

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