The suspensions of redemptions during the COVID 19 crisis – a case for pre-emptive liquidity measures?

Michael Grill, Luis Molestina Vivar and Michael Wedow

Macroprudential Bulletin, 2021, vol. 12

Abstract: Following the onset of the coronavirus (COVID‑19) crisis, a significant number of European investment funds suspended redemptions. We find that many of those funds had invested in illiquid assets, were leveraged or had lower cash holdings than funds that were not suspended. Furthermore, suspensions were more likely to be seen in jurisdictions where pre-emptive liquidity measures were not available. Our findings also suggest that suspensions have spillover effects on other funds and sectors, highlighting the importance of pre-emptive liquidity management measures. JEL Classification: G23, G28, G01

Keywords: Liquidity risk; Open-ended investment funds; Suspension of redemptions (search for similar items in EconPapers)
Date: 2021-04
Note: 1280809
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Citations: View citations in EconPapers (7)

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