I'm a Senior Economist at Bank of Canada as part of the Economic and Financial Research Department and Financial Stability Department. I obtained my PhD from University of Wisconsin-Madison [All views on this website are my own and not those of the Bank of Canada.]
Financial Economics, Banking, Industrial Organization.
📧XTian [at] bank-banque-canada [dot] ca
Abstract: Households often consolidate their banking at a single institution, yet the literature mainly studies how deposit relationships shape mortgage choice. We study the reverse: does mortgage lending create deposit relationships? Using Canadian Financial Monitor panel data (2009–2018) and a matched stacked difference-in-differences design, we find that mortgage origination makes households substantially more likely to adopt their lender as their main and largest-balance bank, raises their deposit share there, and expands their use of the lender's other products. How the effects vary by income, deposit balances and prior multibanking points to demand-side frictions rather than lender marketing. A model shows that open banking's effect on mortgage rates depends on which consolidation friction a policy targets.
Abstract: Using detailed data from the introduction of a new high value payment (HVPS) system in Canada, we show how participants learn to use the new gridlock resolution arrangement and coordinate to create gridlocks to save liquidity. These observed behaviors are consistent with the equilibrium of a ``gridlock game'' that captures the key incentives participants face in the system. The findings have important implications for the design of HVPSs and shed light on financial institutions' liquidity preference.
Abstract: This paper studies how the liquidation mechanism in DeFi loans affects the price volatility of cryptocurrencies. We consider the two commonly used mechanisms: fixed spread, and auctions. We show that results depend on liquidators' cost of participating in liquidations. If this cost is low, auctions amplify negative shocks less than the fixed spread mechanism. If this cost is high, the reverse is true. If the cost is intermediate, auctions amplify small negative shocks less and big shocks more than the fixed-spread mechanism.
Awarded the 2023 Public Utility Research Center Prize for the best paper in regulatory economics at the International Industrial Organization Conference (IIOC)
Also presented at the 2025 Annual Conference at the Banco Central do Brasil, 2025 CEA Conference, 2025 Northern Finance Association (NFA) Meeting
Abstract: We study the unintended effects of the Home Affordable Refinance Program (HARP) on mortgage borrowers. Originally designed to help underwater borrowers refinance after 2008, HARP inadvertently amplified the market power of incumbent lenders by introducing a cost differential between incumbents and their competitors. To assess the welfare implications of this cost advantage, we develop and estimate a structural model of dynamic refinancing decisions with lenders’ offers arising from a search and negotiation process. Our findings reveal that although the cost asymmetry was rectified by a 2013 policy, it still resulted in a welfare loss exceeding the impact of search frictions.
Abstract: This paper examines inefficiencies arising from a lack of long-term contracting in small business lending in China. I develop and estimate a dynamic model where firms repeatedly interact with the same lender. All loans are short-term. Collateral can be used to deter a strategic default by a firm, but the lender cannot recover the full value of the collateral in the case of a default. The endogenous contract terms—including interest rates, loan size and collateral—reflect a firm’s probability of default in equilibrium. Learning drives the dynamics of contract terms because a firm’s profitability type is unknown. Long-term contracts improve welfare mainly by mitigating the incentives for a firm to default.
Abstract: This paper examines inefficiencies arising from a lack of long-term contracting in small business lending in China. I develop and estimate a dynamic model where firms repeatedly interact with the same lender. All loans are short-term. Collateral can be used to deter a strategic default by a firm, but the lender cannot recover the full value of the collateral in the case of a default. The endogenous contract terms—including interest rates, loan size and collateral—reflect a firm’s probability of default in equilibrium. Learning drives the dynamics of contract terms because a firm’s profitability type is unknown. Long-term contracts improve welfare mainly by mitigating the incentives for a firm to default
Abstract: This paper examines inefficiencies arising from a lack of long-term contracting in small business lending in China. I develop and estimate a dynamic model where firms repeatedly interact with the same lender. All loans are short-term. Collateral can be used to deter a strategic default by a firm, but the lender cannot recover the full value of the collateral in the case of a default. The endogenous contract terms—including interest rates, loan size and collateral—reflect a firm’s probability of default in equilibrium. Learning drives the dynamics of contract terms because a firm’s profitability type is unknown. Long-term contracts improve welfare mainly by mitigating the incentives for a firm to default.
Journal of Payment Strategy and Systems
(Media coverage: Canadian RTGS system improves payments efficiency, paper says - Central Banking)
BoC Staff Working Paper
BoC Staff Analytical Notes
- "Collateral Law and Enforcement Risk: Evidence from Native American Reservations" by Leo Leitzinger
Northern Finance Association (NFA) Annual Meeting, September 2026
- "Low Interest Rates, Fragility, and the Desertification of Banking" by Christopher James and Nitish Kumar
Northern Finance Association (NFA) Annual Meeting, September 2025
- "Financing Costs and Development" by Tiago Cavalcanti, Joseph P. Kaboski, Cezar Santos, Leonardo Alencar, and Bruno Martins
Annual Conference of the Banco Central do Brasil, May 2025
- "Battle of the Bots: Flash Loans, Miner Extractable Value and Efficient Settlement" by Alfred Lehar and Christine A. Parlour
Canadian Economics Association (CEA) Annual Conference, June 2024