Spillovers of funding dry-ups

Arbeitspapier

We uncover a new channel for spillovers of funding dry-ups. The 2016 US money market fund (MMF) reform exogenously reduced unsecured MMF funding for some banks. We use novel data to trace those banks to a platform for corporate deposit funding. We show that intensified competition for corporate deposits spilled the funding squeeze over to other banks with no MMF exposure. These banks paid more for deposits, and their pool of funding providers deteriorated. Moreover, their lending volumes and margins declined, and their stocks underperformed. Our results suggest that banks' competitiveness in funding markets affect their competitiveness in lending markets.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SAFE Working Paper ; No. 259

Classification and Topics

• Classification: Wirtschaft ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Financial Institutions and Services: Government Policy and Regulation
• Subject: funding dry-ups ; competition ; spillovers ; money market funds ; corporate deposits ; dollarfunding

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Aldasoro, Inaki ; Balke, Florian ; Barth, Andreas ; Eren, Egemen
• Event: Veröffentlichung
• (who): Goethe University Frankfurt, SAFE - Sustainable Architecture for Finance in Europe
• (where): Frankfurt a. M.
• (when): 2019

Further information

• Handle: http://hdl.handle.net/10419/203451
• URN: urn:nbn:de:hebis:30:3-511183