Geopolitical spillover: The Russia–Ukraine invasion and its effects on money market funds

Vaibhav Keshav and Meghana Vaidya

European Journal of Political Economy, 2025, vol. 89, issue C

Abstract: This study is the first to examine the impact of the Russia–Ukraine Conflict on the United States (US) Money Market Fund (MMF) industry. Using granular data, we observe a significant outflow of $22 billion in US Prime MMFs compared to government MMFs. This suggests a “flight for safety” among investors. We report no prime MMF asset outflows in the European MMFs. Our results are robust for various fund-level controls and multiple fixed effects. This study provides new insights into how geopolitical events, like the Russia–Ukraine conflict, affect capital markets. Finally, we discuss its implications for investors, policymakers, and regulators concerned about maintaining financial stability during geopolitical turmoil.

Keywords: Money market funds; Runs; Financial stability; USA; Russia; Geopolitical conflicts (search for similar items in EconPapers)
JEL-codes: E58 G23 G28 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:89:y:2025:i:c:s0176268025000941

DOI: 10.1016/j.ejpoleco.2025.102734

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