Heng Chen

Principal Researcher

Bio

Heng Chen is a Principal Researcher in the Currency Department at the Bank of Canada. His primary research interests center on the structural identification and estimation of the causal effects of the method of payments on the cash usage. Specific topics include distributional estimations using the longitudinal CFM data. Heng Chen received his PhD in economics from Vanderbilt University.

Research Field(s): Macroeconomics Payments Economics

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Staff discussion papers

Cash and COVID-19: The impact of the pandemic on demand for and use of cash

Consumer spending declined significantly during the recent COVID-19 pandemic. This negative shock likely reduced spending across all methods of payment (cash, debit, credit, etc.). The mix of payment methods consumers use could also be affected. We study how the pandemic has influenced the demand for and use of cash. We also offer insights into the use of other payment methods, such as debit and credit cards.

The Costs of Point-of-Sale Payments in Canada

Using data from our 2014 cost-of-payments survey, we calculate resource costs for cash, debit cards and credit cards. For each payment method, we examine the total cost incurred by consumers, retailers, financial institutions and infrastructures, the Royal Canadian Mint and the Bank of Canada.

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Staff working papers

A Spatial Model of Bank Branches in Canada

Staff Working Paper 2020-4 Heng Chen, Matthew Strathearn
Using data on bank branch locations across Canada from 2008 to 2018, we explore an interesting aspect of bank branch competition—geographic concentration. We find that bank branch density does not correlate with geographic and market concentration; however, we do find strong correlation with postal-code demographics.
Content Type(s): Staff research, Staff working papers Topic(s): Firm dynamics, Market structure and pricing JEL Code(s): L, L1, R, R3

Cash Versus Card: Payment Discontinuities and the Burden of Holding Coins

Staff Working Paper 2017-47 Heng Chen, Kim Huynh, Oz Shy
Cash is the preferred method of payment for small value transactions generally less than $25. We provide insight to this finding with a new theoretical model that characterizes and compares consumers’ costs of paying with cash to paying with cards for each transaction.

Retail Payment Innovations and Cash Usage: Accounting for Attrition Using Refreshment Samples

Staff Working Paper 2014-27 Heng Chen, Marie-Hélène Felt, Kim Huynh
We exploit the panel dimension of the Canadian Financial Monitor (CFM) data to estimate the impact of retail payment innovations on cash usage. We estimate a semiparametric panel data model that accounts for unobserved heterogeneity and allows for general forms of non-random attrition.

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Technical reports

2017 Methods-of-Payment Survey: Sample Calibration and Variance Estimation

Technical Report No. 114 Heng Chen, Marie-Hélène Felt, Christopher Henry
This technical report describes sampling, weighting and variance estimation for the Bank of Canada’s 2017 Methods-of-Payment Survey. Under quota sampling, a raking ratio method is implemented to generate weights with both post-stratification and nonparametric nonresponse weight adjustments.
Content Type(s): Staff research, Technical reports Topic(s): Econometric and statistical methods JEL Code(s): C, C8, C81, C83

The Bank of Canada 2015 Retailer Survey on the Cost of Payment Methods: Calibration for Single-Location Retailers

Technical Report No. 109 Heng Chen, Rallye Shen
Calibrated weights are created to (a) reduce the nonresponse bias; (b) reduce the coverage error; and (c) make the weighted estimates from the sample consistent with the target population in terms of certain key variables.

Variance Estimation for Survey-Weighted Data Using Bootstrap Resampling Methods: 2013 Methods-of-Payment Survey Questionnaire

Technical Report No. 104 Heng Chen, Rallye Shen
Sampling units for the 2013 Methods-of-Payment Survey were selected through an approximate stratified random sampling design. To compensate for non-response and non-coverage, the observations are weighted through a raking procedure.
Content Type(s): Staff research, Technical reports Topic(s): Econometric and statistical methods JEL Code(s): C, C8, C83

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Journal publications

Refereed journals

  • “Quantile Treatment Effects in the Regression Kink Design”
    (with Harold D. Chiang and Yuya Sasaki), Econometric Theory, forthcoming.
  • “A Spatial Panel Model of Bank Branches in Canada”
    (with Matthew Strathearn), Advances in Econometrics (Volume 42): The Econometrics of Networks. Editors: Áureo De Paula (UCL), Elie Tamer (Harvard), and Marcel Voia (Carleton), 2019.
  • “Identification and Wavelet Estimation of Weighted ATE in a Class of Switching Regime Models”
    (with Yanqin Fan), Journal of Econometrics, 2019.
  • “The Mode is the Message: Using Paradata to Identify Survey Design Effects”
    (with Geoff Dunbar and Rallye Shen), Advances in Econometrics (Volume 41): Essays in Honor of Cheng Hsiao. Editors: M. Hashem Pesaran (USC), Tong Li (Vanderbilt), and Dek Terrell (LSU), 2019.
  • “Cash versus Card: Payment Discontinuities and the Burden of Holding Coins”
    (with Kim Huynh and Oz Shy), Journal of Banking and Finance, 2019.
  • “Variance Estimation for Survey-Weighted Data Using Bootstrap Resampling Methods: 2013 Methods-of-Payment Survey Questionnaire”
    (with Rallye Shen), Advances in Econometrics (Volume 39): The Econometrics of Complex Survey Data: Theory and Applications. Editors: Gautam Tripathi (U Luxembourg), David Jacho-Chavez (Emory U), Kim P. Huynh (Bank of Canada), 2018.
  • “Measuring Consumer Cash Holdings: Lessons from the 2013 Bank of Canada Methods-of-Payment Survey”
    (with Chris Henry, Kim Huynh, Rallye Shen, Kyle Vincent), Survey Practice, 2016.
  • “Retail Payment Innovations and Cash Usage: Accounting for Attrition Using Refreshment Samples”
    (with Marie-Helene Felt and Kim Huynh), Journal of Royal Statistical Society: Series A, 2016.
  • “Inference for the Correlation Coefficient between Potential Outcomes in the Gaussian Switching Regime Model”
    (with Yanqin Fan and Ruixuan Liu), Journal of Econometrics, 2016.
  • “Sheep in Wolf's Clothing: Using the Least Squares Criterion for Quantile Regression, Economics Letters, 2015.
  • “A Flexible Parametric Approach for Estimating Switching Regime Models and Treatment Effect Parameters”
    (with Yanqin Fan and Jisong Wu), Journal of Econometrics, 2014.

Other

Working papers

  • “Latent group structures with heterogeneous distributions: Identification and Estimation”
    (with Wendun Wang and Xuan Leng).
  • “Quantile Treatment Effects in the Regression Kink Design”
    (with Harold D. Chiang and Yuya Sasaki).
  • “Within-group Estimators for Fixed Effects Quantile Models with Large N and Large T”.
  • “Local Polynomial Wavelet Estimation of the Local Average Treatment Effect”.