History of Discount Window Stigma

Olivier Armantier, Helene Lee and Asani Sarkar

No 20150810, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: In August 2007, at the onset of the recent financial crisis, the Federal Reserve encouraged banks to borrow from the discount window (DW) but few did so. This lack of DW borrowing has been widely attributed to stigma--concerns that, if discount borrowing were detected, depositors, creditors, and analysts could interpret it as a sign of financial weakness. In this post, we review the history of the DW up until 2003, when the current DW regime was established, and argue that some past policies may have inadvertently contributed to a reluctance to borrow from the DW that persists to this day.

Keywords: Discount; Window; Stigma; History (search for similar items in EconPapers)
JEL-codes: G1 G2 (search for similar items in EconPapers)
Date: 2015-08-10
New Economics Papers: this item is included in nep-his
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