Discount window borrowing after 2003: The explicit reduction in implicit costs

Erhan Artuc and Selva Demiralp

Journal of Banking & Finance, 2010, vol. 34, issue 4, 825-833

Abstract: In 2003, the Federal Reserve introduced primary credit as its main discount window lending program. This program replaced the adjustment credit program, which, subject to a number of restrictions, had generated a stigma associated with borrowing from the Federal Reserve. Lessening the stigma of borrowing was viewed as essential for reducing the reluctance to borrow from the Federal Reserve. We develop a structural model of daily borrowing. Using this model, we estimate the implicit cost associated with borrowing. Our results suggest that the stigma of borrowing is significantly reduced.

Keywords: Discount; window; Primary; credit; Federal; funds; market (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (5)

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Working Paper: Discount Window Borrowing after 2003: The Explicit Reduction in Implicit Costs (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:34:y:2010:i:4:p:825-833

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