Who borrows from money market funds?

Iñaki Aldasoro and Sebastian Doerr

BIS Quarterly Review, 2023

Abstract: Classifying all borrowers in about two thirds of the $9 trillion global money market fund (MMF) market, we document that MMFs extend funding primarily to banks and governments. Funding to other non-bank financial institutions (NBFIs) and non-financial corporates is a much smaller fraction of MMFs' assets. When monetary policy tightens, MMF assets increase by about 34 cents for every dollar of bank deposit contraction. MMFs allocate most of this increase to either governments or banks, and only a marginal share to other NBFIs, likely funding arbitrage trades by hedge funds. These findings cast doubt on the assumption, prevalent in the literature, that MMF funding enables other NBFIs to offset a material portion of the contraction in banks' credit supply when rates rise.

JEL-codes: E52 G15 G21 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 (3)

Downloads: (external link)
http://www.bis.org/publ/qtrpdf/r_qt2312d.pdf (application/pdf)
http://www.bis.org/publ/qtrpdf/r_qt2312d.htm (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bis:bisqtr:2312d

Access Statistics for this article

BIS Quarterly Review is currently edited by Christian Upper

More articles in BIS Quarterly Review from Bank for International Settlements Contact information at EDIRC.
Bibliographic data for series maintained by Martin Fessler ().