On this page we showcase our latest research and analysis, conferences and partnerships with researchers outside the Bank.
About the FSRC
The FSRC will advance high-quality financial system research in Canada to inform policy and improve the economic and financial well-being of Canadians. The Centre showcases the Bank’s latest financial system research and analysis, helping us to build partnerships with researchers outside the Bank. We will also host an annual conference highlighting financial system research from Canada and around the world, including our own research and the results of our joint research ventures.
Research
Our goal is to advance the understanding of the structure, function and evolution of the Canadian financial system. This is essential to the core functions of the Bank. Our in-depth research helps identify risks and shapes policy by addressing issues in financial markets, banking, payments systems and other matters in the financial system.
On the Fragility of DeFi Lending
We develop a dynamic model to capture key features of decentralized finance lending. We identify a price-liquidity feedback: the market outcome in any given period depends on agents' expectations about lending activities in future periods, with higher future price expectations leading to more lending and higher prices in that period.
Jonathan Chiu
Emre Ozdenoren
Kathy Yuan
Shengxing Zhang
Content Types:
Staff research,
Staff working papers
February 22, 2023
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.
Jason Allen
Robert Clark
Jean-François Houde
Shaoteng Li
Anna Trubnikova
Content Types:
Staff research,
Staff working papers
February 14, 2023
Stress Relief? Funding Structures and Resilience to the Covid Shock
Funding structures affected the amount of financial stress different countries and sectors experienced during the spread of COVID-19 in early 2020. Policy responses targeting specific vulnerabilities were more effective at mitigating this stress than those supporting banks or the economy more broadly.
Kristin Forbes
Christian Friedrich
Dennis Reinhardt
Content Types:
Staff research,
Staff working papers
January 30, 2023
Mandatory Retention Rules and Bank Risk
This paper studies, theoretically and empirically, the unintended consequences of mandatory retention rules in securitization. It proposes a novel model showing that while retention strengthens monitoring, it may also encourage banks to shift risk.
Geographical and Cultural Proximity in Retail Banking
This paper measures how both geographical and cultural proximity of bank branches affect household credit choice and pricing. For credit products that require high levels of ex-ante screening, we find that both proximities can complement each other in reducing the cost of providing soft information, thereby increasing credit access.
Santiago Carbo-Valverde
Héctor Pérez Saiz
Hongyu Xiao
Content Types:
Staff research,
Staff working papers
January 5, 2023
Regulatory Requirements of Banks and Arbitrage in the Post-Crisis Federal Funds Market
This paper explains the nature of interest rates in the U.S. federal funds market after the 2007-09 financial crisis. We build a model of the over-the-counter lending market that incorporates new aspects of the financial system: abundance of liquidity, different regulatory standards for banks, and arbitrage opportunities created by limited access to the facility granting interest on excess reserves.
Rodney J. Garratt
Sofia Priazhkina
Content Types:
Staff research,
Staff working papers
November 28, 2022
Conferences
We regularly bring together researchers from academic and policy institutions at conferences that discuss financial system relevant topics such as banking regulation, housing markets, retail payments, and the next generation of central bank models.
4th Bank of Canada FSRC Macro-Finance Conference
Conference held on May 17 and 18, 2021.Content Types:
Conferences and workshops
May 17, 2021
Financial Markets’ Response to COVID-19 Policy Interventions
Policy-makers reacted to the COVID-19 crisis through a variety of channels. This Systemic Risk Centre conference, co-organized with the Bank of Canada, focused on how financial markets responded to these policy initiatives and asked what we have learned for future interventions.Content Types:
Conferences and workshops
November 27, 2020
Debt Management Modelling Workshop
The Bank of Canada hosted a one-day workshop focusing on advances in models and frameworks for sovereign debt management.Content Types:
Conferences and workshops
April 24, 2020
External partnerships
We value research partnerships and offer opportunities for experienced and promising researchers in a variety of fields.