On the Fragility of DeFi Lending Staff working paper 2023-14 Jonathan Chiu, Emre Ozdenoren, Kathy Yuan, Shengxing Zhang 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. Content Type(s): Staff research, Staff working papers JEL Code(s): G, G0, G01, G1, G10 Research Theme(s): Financial system, Financial stability and systemic risk, Money and payments, Digital assets and fintech
October 21, 2016 2nd Annual Conference on the Chinese Economy Workshop held on 21 and 22 October 2016 (papers in unedited, electronic format only) Content Type(s): Conferences and workshops
Government Corruption and Foreign Direct Investment Under the Threat of Expropriation Staff working paper 2016-13 Christopher Hajzler, Jonathan Rosborough Foreign investment is often constrained by two forms of political risk: expropriation and corruption. We examine the role of government corruption in foreign direct investment (FDI) when contracts are not fully transparent and investors face the threat of expropriation. Content Type(s): Staff research, Staff working papers JEL Code(s): F, F2, F21, F23, F3, F34 Research Theme(s): Financial system, Financial stability and systemic risk, Models and tools, Economic models, Structural challenges, International trade, finance and competitiveness
October 31, 2022 Research Update - October 2022 This monthly newsletter features the latest research publications by Bank of Canada economists including external publications and working papers published on the Bank of Canada’s website. Content Type(s): Staff research, Research newsletters
Housing and Tax-Deferred Retirement Accounts Staff working paper 2016-24 Anson T. Y. Ho, Jie Zhou Assets in tax-deferred retirement accounts (TDA) and housing are two major components of household portfolios. In this paper, we develop a life-cycle model to examine the interaction between households’ use of TDA and their housing decisions. Content Type(s): Staff research, Staff working papers JEL Code(s): C, C6, C61, D, D1, D14, D9, D91, E, E2, E21, H, H2, H24, R, R2, R21 Research Theme(s): Financial system, Household and business credit, Models and tools, Economic models, Monetary policy, Real economy and forecasting
Assessing the US and Canadian neutral rates: 2024 update Staff analytical note 2024-9 Frida Adjalala, Felipe Alves, Hélène Desgagnés, Wei Dong, Dmitry Matveev, Laure Simon We assess both the US and Canadian nominal neutral rates to be in the range of 2.25% to 3.25%, somewhat higher than the range of 2.0% to 3.0% in 2023. The assessed range is back to the level it was at in April 2019. Content Type(s): Staff research, Staff analytical notes JEL Code(s): E, E4, E40, E43, E5, E50, E52, E58, F, F4, F41 Research Theme(s): Models and tools, Economic models, Monetary policy, Monetary policy framework and transmission, Structural challenges, Demographics and labour supply
Banking Competition and Access to Cash and Retail Banking Services in Rural Canada Staff working paper 2026-19 Hongyu Xiao, Robert Petrunia, Sarah Lucky We study access to Canadian retail banking and cash services in rural, localized markets using the Bresnahan-Reiss entry threshold framework. We find that the first retail banking services branch entry requires about 500 residents in an average market, whereas the first cash services location requires about 80 residents. Content Type(s): Staff research, Staff working papers JEL Code(s): D, D1, D14, G, G2, G21, L, L1, L10, L13 Research Theme(s): Financial system, Financial institutions and intermediation, Financial system regulation and oversight, Money and payments, Cash and bank notes
A Macroeconomic Model of an Epidemic with Silent Transmission and Endogenous Self-isolation Staff working paper 2020-50 Antonio Diez de los Rios We study the interaction between epidemics and economic decisions in a model that has silent transmission of the virus. We find that rational behaviour strongly diminishes the severity of the epidemic but worsens the economic recession. We also find that the detection and isolation of not only symptomatic individuals but also those who are infected and asymptomatic or mildly symptomatic can reduce the severity of the recession caused by the pandemic. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E1, H, H0, I, I1 Research Theme(s): Models and tools, Economic models, Monetary policy, Inflation dynamics and pressures, Real economy and forecasting, Structural challenges, Demographics and labour supply
November 4, 2014 Housing Finance in Canada: Looking Back to Move Forward Lawrence L. Schembri The Canadian system of housing finance proved to be resilient and efficient during the global financial crisis and its aftermath. The system’s effectiveness is the result of a rigorous prudential regulatory and supervisory regime coupled with targeted government guarantees of mortgage insurance and securitization products. JEL Code(s): G21, R31, R38
December 16, 2001 Risk Management in the Exchange Fund Account Bank of Canada Review - Winter 2001–2002 Michel Rochette In this article, author Michel Rochette of the Bank's Risk-Management Unit briefly describes the initiatives undertaken to identify, analyze, model, and manage the principal risks inherent in the transactions of the Exchange Fund Account (EFA), where the international reserves of the federal government are held. The author focuses on five types of risk: credit risk, market risk, liquidity risk, operational risk, and legal risk. In addition, the author presents the risk-management principles underlying the activities of the EFA and the governance structure of the Account. Content Type(s): Publications, Bank of Canada Review articles