Chris D'Souza

Principal Researcher


Chris D'Souza

Principal Researcher
Canadian Economic Analysis
Regional Analysis

Bank of Canada
234 Laurier Avenue West
Ottawa, ON, K1A 0G9


Funding Advantage and Market Discipline in the Canadian Banking Sector

Staff Working Paper 2013-50 Mehdi Beyhaghi, Chris D'Souza, Gordon S. Roberts
We employ a comprehensive data set and a variety of methods to provide evidence on the magnitude of large banks’ funding advantage in Canada, and on the extent to which market discipline exists across different securities issued by the Canadian banks.
Content Type(s): Staff Research, Staff Working Papers Topic(s): Financial Institutions, Interest rates JEL Code(s): G, G0, G01, G2, G21, G28, G3, G32, G33

11 June 2009 Collateral Management in the LVTS by Canadian Financial Institutions

This article examines the incentives for banks to hold various assets on their balance sheets for use as collateral when the opportunity cost of doing so can be high. Focusing on the five-year period (2002-07) that preceded the financial crisis, it examines the choices made by financial institutions among the assets that are pledged as collateral in Canada's Large Value Transfer System. This serves as a baseline for collateral-management practices during relatively normal times. The results of this study are important for policy-makers, especially the Bank of Canada, which is concerned both about the efficient functioning of fixed-income markets and about the credit risk it ultimately bears in insuring LVTS settlement. The results suggest that relative market liquidity and market-making capacity are important factors in the choice of securities pledged as collateral in the LVTS.

11 November 2008 The Role of Dealers in Providing Interday Liquidity in the Canadian-Dollar Market

Access to information about the future direction of the exchange rate can be extremely valuable in the foreign exchange market. Evidence presented in this article suggests that Canadian dealers are more likely to provide interday liquidity to foreign, rather than Canadian, financial customers, since foreign financial flows can be more informative about future movements in the exchange rate. The author reveals a statistical relationship between the supply of liquidity provided by non-financial firms and that provided by dealing institutions across time, and across markets, and suggests that the relationship between the positions of commercial clients and market-makers, and the role played by dealers in interday liquidity provision, has been understated in the market microstructure literature.

The Role of Foreign Exchange Dealers in Providing Overnight Liquidity

Staff Working Paper 2008-44 Chris D'Souza
This paper illustrates that dealers in foreign exchange markets not only provide intraday liquidity, they are key participants in the provision of overnight liquidity. Dealing institutions receive compensation for holding undesired inventory balances in part from the information they receive in customer trades.

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Refereed Journals

  • "The Effects of Bank Consolidation on Risk Capital Allocation and Market Liquidity"
    (with A. Lai), 2006, in Journal of Financial Research, 29, p. 271-291.
  • "How Liquid are Canadas?"
    (with C. Gaa), 2004, Canadian Investment Review, Winter, p. 23-28.
  • "How Do Banks Respond to Capital Shocks?"
    (with A. Lai), 2004, Monetaria, 27:1 p. 33-56.




  • Ph.D., Queen's University at Kingston
  • M.A., Queen's University at Kingston
  • B.A. (Honours), University of Western Ontario

Research Interests

  • financial regulation
  • financial institution risk management, capital allocation, and portfolio diversification
  • market microstructure of foreign exchange and fixed-income markets


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