European banks and Fed liquidity facilities during the Global Financial Crisis: Good news for the bad and bad news for the good

Hervé Alexandre (), Catherine Refait-Alexandre and Larry Wall
Additional contact information
Hervé Alexandre: DRM, CNRS, [UMR 7088], Université Paris-Dauphine, PSL, Place du Maréchal de Lattre de Tassigny 75775 PARIS Cedex 16;

No 2024-12, Working Papers from CRESE

Abstract: The Fed operated various liquidity facilities during 2007-10 that were intended to alleviate financial system stress but could have been interpreted as an adverse signal. We analyze the response of the credit default swap market to the announcement and usage of these facilities by European banks. We find that Fed financial assistance tended to reduce market perception of risk if the information was related to Fed’s liquidity policies and increased risk perceptions when the information was more about banks’ riskiness. We also find the facilities reduced the perceived risk of publicly assisted banks but increased the perceived risk of banks that were not assisted.

Keywords: Financial crisis; Federal Reserve lending facilities; European banks. (search for similar items in EconPapers)
JEL-codes: E58 G21 G28 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2024-06
New Economics Papers: this item is included in nep-ban, nep-cba and nep-eec
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://crese.univ-fcomte.fr/uploads/wp/WP-2024-12.pdf First version, 2024 (application/pdf)

Related works:
Working Paper: European banks and Fed liquidity facilities during the Global Financial Crisis: Good news for the bad and bad news for the good (2024)
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:crb:wpaper:2024-12

Access Statistics for this paper

More papers in Working Papers from CRESE Contact information at EDIRC.
Bibliographic data for series maintained by Laurent Kondratuk ().