Jason Allen
Senior Research Officer
- Ph.D., Queen's University (2007)
- M.A., Queen's University (2001)
- B.A. (Honours), Concordia University (1999)
Bio
Jason Allen is a Senior Research Officer in the Economic and Financial Research Department at the Bank of Canada. He is an applied microeconomist whose primary research interests center on the household sector and the role that competition in retail banking plays in shaping credit outcomes. Specific topics include price competition in the mortgage market and bankruptcy choice. Jason Allen received his PhD in economics from Queen’s University.
Staff discussion papers
Staff working papers
The Role of Intermediaries in Selection Markets: Evidence from Mortgage Lending
This paper looks at the role mortgage brokers play in helping borrowers generate quotes and qualify for credit. We find that, on average, borrowers that engage with a mortgage broker pay lower interest rates. However, in about 15% of cases, borrowers are steered towards longer amortizing mortgages than they would have chosen absent a broker. Since mortgages with longer amortization have higher total interest costs over the entire life of the mortgage, this steering is expensive.Centralizing Over-the-Counter Markets?
Would a shift in trading in fixed-income markets—from over the counter (bilateral trading) to a centralized electronic platform—improve welfare? We use trade-level data on the secondary market for Government of Canada debt to answer this question.Debt-Relief Programs and Money Left on the Table: Evidence from Canada's Response to COVID-19
During the COVID-19 pandemic, Canadian financial institutions offered debt-relief programs to help borrowers cope with job losses and economic insecurity. We consider the low take-up rates for these programs and suggest that to be effective, such programs must be visible and easy to use.Maturity Composition and the Demand for Government Debt
The main objectives of debt management are to raise stable and low-cost funding to meet the government’s financial needs and to maintain a well-functioning market for government securities.Dynamic Competition in Negotiated Price Markets
Repeated interactions between borrowers and lenders create the possibility of dynamic pricing: lenders compete aggressively with low prices to attract new borrowers and then raise their prices once borrowers have made a commitment. We find such pricing patterns in the Canadian mortgage market.Resolving Failed Banks: Uncertainty, Multiple Bidding & Auction Design
Bank resolution is costly. In the United States, the Federal Deposit Insurance Corporation (FDIC) typically resolves failing banks by auction.The Impact of Macroprudential Housing Finance Tools in Canada: 2005–10
This paper combines loan-level administrative data with household-level survey data to analyze the impact of recent macroprudential policy changes in Canada using a microsimulation model of mortgage demand of first-time homebuyers.The Impact of Bankruptcy Reform on Insolvency Choice and Consumer Credit
We examine the impact of the 2009 amendments to the Canadian Bankruptcy and Insolvency Act on insolvency decisions. Rule changes steered debtors out of division I proposals and into the more cost-effective division II proposals.Capital Structure, Pay Structure and Job Termination
We develop a model to analyze the link between financial leverage, worker pay structure and the risk of job termination. Contrary to the conventional view, we show that even in the absence of any agency problem among workers, variable pay can be optimal despite workers being risk averse and firms risk neutral.Price Negotiation in Differentiated Products Markets: Evidence from the Canadian Mortgage Market
This paper measures market power in a decentralized market where contracts are determined through a search and negotiation process. The mortgage industry has many institutional features which suggest competitiveness: homogeneous contracts, negotiable rates, and, for a given consumer, common lending costs across lenders.Bank publications
Bank of Canada Review articles
February 21, 2013
Conference Summary: Financial Intermediation and Vulnerabilities
The Bank of Canada’s annual economic conference, held in October 2012, brought together experts from across Canada and around the world to discuss key issues concerning financial intermediation and vulnerabilities. The conference covered such topics as household finances and their relationship to financial stability, as well as bank regulation, securitization and shadow banking.
February 23, 2012
Household Insolvency in Canada
With increasing levels of household debt in recent years, the number of households that may be vulnerable to a negative economic shock is rising as well. Decisions made by both the debtor and the creditor can contribute to insolvency. This article presents some stylized facts about insolvency in Canada’s household sector and analyzes the role of creditors in insolvencies. The average debt of an individual filing for bankruptcy is more than 1.5 times that of an average Canadian household; bankruptcy filers tend to be unemployed or in low-wage jobs, and are typically renters. The article reports that banks that approve more loans per branch, which is interpreted as less-intensive use of soft information (such as the loan officer’s assessment of the applicant’s character), experience more client bankruptcies. This finding has important policy implications, because financial institutions that do not use soft information risk further deterioration in their lending portfolios.
February 17, 2011
Competition in the Canadian Mortgage Market
This article begins with a brief examination of the Canadian mortgage market, focusing on the market’s evolution following changes to the Bank Act in 1992, which allowed chartered banks to enter the trust business, and the subsequent entrance of virtual banks and mortgage brokers.
June 14, 2007
Efficiency and Competition in Canadian Banking
Allen and Engert report on recent research at the Bank of Canada on various aspects of efficiency in the Canadian banking industry. This research suggests that, overall, Canadian banks appear to be relatively efficient producers of financial services and they do not exercise monopoly or collusive-oligopoly power. The authors note the value of continuing to investigate opportunities to improve efficiency and competition in financial services in Canada.Financial System Review articles
Journal publications
Refereed journals
- "Centralizing over-the-counter markets"
(with Milena Wittwer), Forthcoming Journal of Political Economy - “Resolving Failed Banks: Uncertainty, Multiple Bidding & Auction Design“
(with Robert Clark, Brent Hickman and Eric Richert), Bank of Canada working paper 2019-30, Forthcoming Review of Economic Studies - "Debt-relief programs and money left on the table: Evidence from Canada's response to COVID-19"
(with Robert Clark, Shaoteng Li and Nicolas Vincent), Bank of Canada working paper 2021-13, Canadian Journal of Economics, 2022, 55 (SI), p. 9-53 (lead article). - “Crisis Management in Canada: Analyzing Default Risk and Liquidity Demand during Financial Stress”, (with Alil Hortacsu and Jakub Kastl), AEJ: micro, 2021, 13, p. 243-275.
- “Variable pay: is it for the worker or the firm?”
(with James Thompson), Journal of Corporate Finance, October 2019, volume 58, p. 551-566. - "Investment dealer collateral and leverage procyclicality",
(with Andrew Usher), Empirical Economics, 2020, 58(2), p. 489-505. - "Search Frictions and Market Power in Negotiated Price Markets",
(with Robert Clark and Jean-Francois Houde). Journal of Political Economy, 2019, 127(4), p. 1550-1598. - "The impact of bankruptcy reform on consumer insolvency choice"
(with Kiana Basiri), Canadian Public Policy, Volume 44 (2), p. 100-111. - "The Impact of Macroprudential Housing Finance Tools in Canada"
(with Tim Grieder, Brian Peterson, and Tom Roberts), Journal of Financial Intermediation. - "Consumer Bankruptcy, Bank Mergers, and Information"
(with Evren Damar and David Martinez-Miera), Review of Finance, July 2016, Volume 20, Issue 4, p. 1289-1320. - "Bank Loans for Private and Public Firms in a Liquidity Crunch”
(with Teodora Paligorova), Journal of Financial Stability, vol. 18 (June), p. 106-116. - "Efficiency and Bargaining Power in the Interbank Loan Market”
(with James Chapman, Federico Echenique and Matthew Shum), International Economic Review, May 2016, vol. 57(2), p. 691-716. - "The Effect of Mergers in Search Markets: Evidence from the Canadian Mortgage Industry",
(with Robert Clark and Jean-Francois Houde). American Economic Review, 2014, 104(10), p. 3365-3396. - "Price Dispersion in Mortgage Markets"
(with Robert Clark and Jean-Francois Houde). Journal of Industrial Economics, 2014, 62(3), p. 377-416. - "Empirical Likelihood Block Bootstrapping,"
(with Allan W. Gregory and Katsumi Shimotsu), Journal of Econometrics, 2011, 161(2), p. 110-121. - "Canadian City Housing Prices and Urban Market Segmentation,"
(with Robert Amano, David P. Byrne, and Allan W. Gregory). Canadian Journal of Economics, vol. 42(3), p. 1132-1149, 2009. - "Size Matters: Covariance Matrix Estimation under the Alternative,"
The Econometrics Journal vol. 10(1), p. 637-644, 2007. - "Efficiency and Economies of Scale of Large Canadian Banks,"
(with Ying Liu), Canadian Journal of Economics vol. 40(1), p. 225-244, 2007.
Other
Work in progress
- "The role of intermediaries in selection markets: Evidence from mortgage lending"
(with Robert Clark, Jean-Francois Houde, Shaoteng Li, and Anna Trubnikova) - "Regulating a Housing Boom"
(with Daniel Greenwald) - "Intermediary market power and capital constraints"
(with Milena Wittwer) - "Entry and Exit in Treasury Auctions"
(with Ali Hortacsu, Eric Richert, and Milena Wittwer)