Do non-banks need access to the lender of last resort? Evidence from fund runs

Johannes Breckenfelder and Marie Hoerova

No 18122, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Are central bank tools effective in reaching non-banks with no access to the lender-of-last-resort facilities? Using runs on mutual funds in March 2020 as a laboratory, we show that, following the announcement of large-scale purchases, funds with higher ex ante shares of assets eligible for central bank purchases saw their performance improve by 3.6 percentage points and outflows decrease by 61% relative to otherwise similar funds. Following central bank liquidity provision to banks, the growth rate of repo lending to funds by banks more exposed to the system-wide liquidity crisis was up to five times higher compared to other banks.

JEL-codes: E58 G01 G10 G21 G23 (search for similar items in EconPapers)
Date: 2023-04
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Working Paper: Do non-banks need access to the lender of last resort? Evidence from fund runs (2023)
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