Financial institutions

• Entry and Exit in Treasury Auctions

  Staff Working Paper 2024-29 Jason Allen, Ali Hortaçsu, Eric Richert, Milena Wittwer

  This paper introduces and estimates a structural model of the Canadian primary market for government debt. We assess the role of dealer exit in this market as a key reason for increased, yet irregular, customer entry and quantify the benefits of greater customer competition against the costs of higher market volatility.

  Content Type(s): Staff research, Staff working papers Topic(s): Debt management, Financial institutions, Financial markets, Market structure and pricing JEL Code(s): D, D4, D44, D47, G, G1, G12, G2, G28

• The reliance of Canadians on credit card debt as a predictor of financial stress

  Staff Analytical Note 2024-18 Jia Qi Xiao

  I analyze the relationship between carrying a credit card balance and future financial stress. I find that carrying a balance significantly increases the likelihood that credit card holders miss future debt payments. This likelihood tends to rise as credit card balances grow and are held for long periods.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Credit and credit aggregates, Financial institutions, Interest rates, Recent economic and financial developments JEL Code(s): D, D1, E, E4, E5, G, G2, G21

• Could all-to-all trading improve liquidity in the Government of Canada bond market?

  Staff Analytical Note 2024-17 Jabir Sandhu, Rishi Vala

  We find that on any given day, nearly half of Government of Canada bond transactions by clients of dealers can be offset with other clients, including during the turmoil in March 2020. Our results show that under certain conditions clients could potentially trade directly with each other and are a step towards understanding the relevance of broader all-to-all trading in the Government of Canada bond market.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Coronavirus disease (COVID-19), Financial institutions, Financial markets, Financial stability, Market structure and pricing JEL Code(s): D, D4, D47, D5, D53, G, G0, G01, G1, G12, G13, G14, G2, G21, G23