Spillovers of funding dry-ups

Iñaki Aldasoro, Florian Balke, Andreas Barth and Egemen Eren

Journal of International Economics, 2022, vol. 137, issue C

Abstract: We uncover a new channel for spillovers of funding dry-ups. The US money market fund (MMF) reform led to an exogenous reduction in unsecured MMF funding for some banks. We use novel data to trace those banks to a corporate deposit funding platform. As they sought to replace the lost dollar funding, the funding squeeze spilled over to other banks with no MMF exposure. The latter paid more for corporate dollar deposits, and their pool of funding providers deteriorated. Their dollar lending volumes and margins declined. Our results suggest banks’ competitiveness in funding markets affect their competitiveness in lending markets.

Keywords: Funding dry-ups; Spillovers; Money market funds; Corporate deposits; Dollar funding; Banks (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S002219962200054X
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Spillovers of funding dry ups (2019)
Working Paper: Spillovers of funding dry-ups (2019)
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:inecon:v:137:y:2022:i:c:s002219962200054x

DOI: 10.1016/j.jinteco.2022.103622

Access Statistics for this article

Journal of International Economics is currently edited by Gourinchas, Pierre-Olivier and Rodríguez-Clare, Andrés

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