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The Effects of Liquidity Regulation on Bank Demand in Monetary Policy Operations

Marcelo Rezende, Mary-Frances Styczynski and Cindy M. Vojtech
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Marcelo Rezende: https://www.federalreserve.gov/econres/marcelo-rezende.htm
Cindy M. Vojtech: https://www.federalreserve.gov/econres/cindy-m-vojtech.htm

No 2016-090, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: We estimate the effects of the liquidity coverage ratio (LCR), a liquidity requirement for banks, on the tenders that banks submit in Term Deposit Facility operations, a Federal Reserve tool created to manage the quantity of bank reserves. We identify these effects using variation in LCR requirements across banks and a change over time that allowed term deposits to count toward the LCR. Banks subject to the LCR submit tenders more often and submit larger tenders than exempt banks when term deposits qualify for the LCR. These results suggest that liquidity regulation affects bank demand in monetary policy operations.

Keywords: Liquidity Coverage Ratio; Term Deposit Facility; Monetary Policy; Excess Reserves; Basel III (search for similar items in EconPapers)
JEL-codes: E52 E58 G21 G28 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2016-10-24
New Economics Papers: this item is included in nep-ban, nep-cba, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2016-90

DOI: 10.17016/FEDS.2016.090

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