Sophisticated and Unsophisticated Runs

Marco Cipriani and Gabriele La Spada

No 20210602, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: In March 2020, U.S. prime money market funds (MMFs) suffered heavy outflows following the liquidity shock triggered by the COVID-19 crisis. In a previous post, we characterized the run on the prime MMF industry as a whole and the role of the liquidity facility established by the Federal Reserve (the Money Market Mutual Fund Liquidity Facility) in stemming the run. In this post, based on a recent Staff Report, we contrast the behaviors of retail and institutional investors during the run and explain the different reasons behind the run.

Keywords: COVID-19; sophisticated investors; money market funds (MMFs); MMF (search for similar items in EconPapers)
JEL-codes: G1 G23 (search for similar items in EconPapers)
Date: 2021-06-02
New Economics Papers: this item is included in nep-mon and nep-ore
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Citations: View citations in EconPapers (4)

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Working Paper: Sophisticated and Unsophisticated Runs (2020)
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