Bond Funds in the Aftermath of SVB’s Collapse

Nicola Cetorelli and Sarah Zebar

No 20231128, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: March 2023 will rightfully be remembered as a period of major turmoil for the U.S. banking industry. In this post, we go beyond banks to analyze how fixed-income, open-end funds (bond funds) fared in the days after the start of the banking crisis. We find that bond funds experienced net outflows each day for almost three weeks after the run on Silicon Valley Bank (SVB), and that these outflows were experienced diffusely across the entire segment. Our preliminary evidence suggests that the outflows from bond funds may have been an unintended consequence of the exceptional measures taken to strengthen the balance sheet of banks during this time.

Keywords: Silicon Valley Bank (SVB); Bank Term Funding Program (BTFP) (search for similar items in EconPapers)
JEL-codes: G2 (search for similar items in EconPapers)
Date: 2023-11-28
New Economics Papers: this item is included in nep-ban and nep-fmk
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