April 12, 2011
Media Release - The Role of Alberta Treasury Branches in the Alberta Financial Market
Calgary: The Frontier Centre for Public Policy released today The Role of Alberta Treasury Branches in the Alberta Financial Market. The study analyses historically the role of Alberta Treasure Branches (ATB) in the context of Alberta’s financial markets, taking into consideration its mandate, and its performance.
Although ATB was created in large part to finance rural and remote areas of the province that traditional Eastern banks would not serve, it has grown to occupy a significant urban presence and to capture sixty percent of the market share outside of that of chartered banks. It now serves populations where financial services are available even in rural areas.
Authored by Frank Atkins, Associate Professor of Economics at the University of Calgary, the paper finds that ATB has enjoyed several market advantages that include not paying deposit insurance or paying lower rates for it, not having to pay taxes, having lax capital controls, and receiving government cash infusions when it has gotten itself into financial troubles because of its undisciplined ways. These many advantages, often lacking in transparency, have not provided the necessary incentives for ATB to maintain fiscal discipline, argues Atkins.
“It appears that, in spite of the fact that ATB is still operating with some competitive advantages in Alberta’s financial markets,” Atkins writes, “it is only able to operate efficiently when the economy of Alberta is performing well, as it is crippled by the incentives put in place by some combination of lax capital controls and government guarantees.”
On balance, ATB presents a significant risk for the Alberta tax payer, and this risk far outweighs the benefits it provides for it no longer serves communities that would otherwise not have such services. ATB provides today no service that other private financial institutions do not provide. The Alberta government “should consider privatizing ATB,” Atkins concludes.
Download a copy of The Role of Alberta Treasury Branches in the Alberta Financial Market HERE.
About the Author:
Frank Atkins (B.A. Hons. and M.A., University of Guelph; Ph.D., Queens University) is Associate Professor of Economics at the University of Calgary. Frank has worked at the Bank of Canada as an Economic Analyst, where he gained a deep appreciation for the difficulties associated with monetary policy formation. Frank’s main academic areas of interest are monetary policy and the application of time series analysis to macroeconomic data. He is a frequent commentator on macroeconomics and policy issues for the major national networks and has published many articles in leading economic journals. Frank had the privilege of supervising the Master of Arts (Economics) thesis of Stephen Harper. In addition, Frank served as a mentor for Danielle Smith while she was completing a Bachelor of Arts degree at the University of Calgary.
For more information and to arrange an interview with the study's author, media (only) should contact:
The Frontier Centre for Public Policy
is an independent public policy think tank whose mission is "to broaden the debate on our future through public policy research and education and to explore positive changes within our public institutions that support economic growth and opportunity."