Spillovers of funding dry ups

Iñaki Aldasoro, Florian Balke, Andreas Barth and Egemen Eren

No 810, BIS Working Papers from Bank for International Settlements

Abstract: 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.

Keywords: funding dry-ups; competition; spillovers; money market funds; corporate deposits; dollar funding (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2019-09
New Economics Papers: this item is included in nep-ban
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Spillovers of funding dry-ups (2022)
Working Paper: Spillovers of funding dry-ups (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:810

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