James Chapman is the Senior Research Director in the Funds Management and Banking Department at the Bank of Canada. James received a Ph.D. in economics and a MSc in statistics from the University of Iowa in 2006. He joined the Bank of Canada as a senior analyst in that year. James’s primary research focus has been on interbank market and financial market infrastructure issues such as liquidity risk and credit risk in large-value payment systems as well as the efficiency of interbank markets. Recently James’s research focus has evolved to include research on fintech related topics. These topics include the use of distributed ledger technology in financial market infrastructure, specifically the Bank’s Project Jasper, as well as questions related to digital currencies such as Bitcoin, Ethereum and initial coin offerings. From March 2015 to October 2016 James was the research director at Payments Canada the operator of the core Canadian payments infrastructure.
Staff Discussion Papers
Liquidity Efficiency and Distribution in the LVTS: Non-Neutrality of System Changes under Network AsymmetryThe authors consider the liquidity efficiency of Tranche 2 of the Large Value Transfer System (LVTS T2) by examining, through an empirical analysis, some plausible strategic reactions of individual participants to a systemwide shock to available liquidity in the system.
Staff Working Papers
Estimating the Structure of the Payment Network in the LVTS: An Application of Estimating Communities in Network DataIn the Canadian large value payment system an important goal is to understand how liquidity is transferred through the system and hence how efficient the system is in settling payments. Understanding the structure of the underlying network of relationships between participants in the payment system is a crucial step in achieving the goal.
Which Bank is the "Central" Bank? An Application of Markov Theory to the Canadian Large Value Transfer SystemWe use a method similar to Google's PageRank procedure to rank banks in the Canadian Large Value Transfer System (LVTS). Along the way we obtain estimates of the payment processing speeds for the individual banks.
Bank of Canada Review Article
Financial System Hub
Financial System Review Article
This report describes a joint endeavour between public and private sectors to explore a wholesale payment system based on distributed ledger technology (DLT). They find that a stand-alone DLT system is unlikely to be as beneficial as a centralized payment system in terms of core operating costs; however, it could increase financial system efficiency as a result of integration with the broader financial market infrastructure.
- "Efficiency and Bargaining Power in the Interbank Loan Market”
(with Jason Allen, Federico Echenique and Matthew Shum), International Economic Review, May 2016, vol. 57(2), p. 691-716.
- “Central Bank Haircut Policy”
(with Jonathan Chiu and Miguel Molico) Annals of Finance, Vol. 7, No. 3, (August 2011), pages 319-348
- “A Model of Tiered Settlement Networks”
(with Jonathan Chiu and Miguel Molico) Journal of Money, Credit and Banking, Forthcoming
- “Rediscounting Under Aggregate Risk with Moral Hazard”
(with Antoine Martin) Journal of Money, Credit and Banking, Forthcoming
- "Bounding Revenue Comparisons across Multi-Unit Auction Formats under ?-Best Response"
(with David McAdams and Harry J. Paarsch) American Economic Review, Vol. 97, No. 2 (May 2007), pages 455-458.
- "Which Bank is the 'Central' Bank? An Application of Markov Theory to the Canadian Large-Value Transfer System"
(with Morten Bech and Rod Garratt), Journal of Monetary Economics, Vol. 57, No. 3 (April 2010), pages 352-363.
- "Bounding Best-Response Violations in Discriminatory Auctions with Private Values"
(with David McAdams and Harry J. Paarsch)
Work in progress
- "Matching in the Interbank Market"