Did the commercial paper funding facility prevent a Great Depression style money market meltdown?

John Duca

Journal of Financial Stability, 2013, vol. 9, issue 4, 747-758

Abstract: This paper analyzes how risk premiums altered the use of commercial paper relative to bank loans during the recent financial crisis. Consistent with the theoretical and empirical literature on how surges in risk premiums can induce plunges in under-collateralized credit or credit funded with noninsured sources, results indicate that a spike in risk premiums induced a plunge in commercial paper use during the recent crisis. This paper also finds that Federal Reserve interventions in the money market helped prevent the commercial paper market from melting down to the extent seen during the early 1930s.

Keywords: Great Depression; Commercial paper; Financial frictions; Credit rationing (search for similar items in EconPapers)
JEL-codes: E44 E50 N12 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1572308912000307
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Did the commercial paper funding facility prevent a Great Depression-style money market meltdown? (2011)
Working Paper: Did the Commercial Paper Funding Facility Prevent a Great Depression Style Money Market Meltdown? (2011)
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:eee:finsta:v:9:y:2013:i:4:p:747-758

DOI: 10.1016/j.jfs.2012.04.002

Access Statistics for this article

Journal of Financial Stability is currently edited by I. Hasan, W. C. Hunter and G. G. Kaufman

More articles in Journal of Financial Stability from Elsevier
Bibliographic data for series maintained by Catherine Liu ().