The response of money market funds to the COVID-19 pandemic

Kyle D. Allen, Ahmed Baig and Drew B. Winters

Finance Research Letters, 2023, vol. 54, issue C

Abstract: The Covid-19 Pandemic has increased the attention paid to money market funds. Using Covid-19 cases and a measure of lockdowns, shutdowns, etc., we analyze if money market fund investors and managers responded to the intensity of the pandemic. We ask whether or not the Federal Reserve implementation of the Money Market Mutual Fund Liquidity Facility (MMLF) had an effect on market participant behavior. We find that institutional prime investors responded significantly to the MMLF. Fund managers responded to the intensity of the pandemic but largely ignored the reduction in uncertainty created by the implementation of the MMLF.

Keywords: COVID-19; Money markets; Money market funds; Mangers; Retail investors (search for similar items in EconPapers)
JEL-codes: G01 G12 G14 G23 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:54:y:2023:i:c:s1544612323001630

DOI: 10.1016/j.frl.2023.103790

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