The Quality of Banks at Stigmatized Lending Facilities

Sriya Anbil and Angela Vossmeyer

AEA Papers and Proceedings, 2019, vol. 109, 506-10

Abstract: When the names of banks that borrow from an emergency lending facility are inadvertently leaked, the facility may become stigmatized. We examine how the quality of the borrowing pool of banks changed when stigma was unexpectedly introduced at a once confidential lending facility during the Great Depression. This facility experienced a compositional shift in the quality of its borrowing pool, where only weaker banks that maintained smaller liquidity buffers used the facility, while an alternative confidential facility attracted stronger banks. Our results shed light on how the design of lending facilities may attract certain types of banks.

JEL-codes: G21 G23 N22 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.1257/pandp.20191093
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