The Unintended Consequences of the Zero Lower Bound Policy

Marco Di Maggio and Marcin Kacperczyk

No 22351, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study the impact of the zero lower bound interest rate policy on the industrial organization of the U.S. money fund industry. We find that in response to policies that maintain low interest rates, money funds: change their product offerings by investing in riskier asset classes; are more likely to exit the market; and reduce the fees they charge their investors. The consequence of fund closures resulting from interest rate policy is the relocation of resources in affected fund families and in the asset management industry in general, as well as decline in capital of issuers borrowing from money funds.

JEL-codes: E52 G23 G28 (search for similar items in EconPapers)
Date: 2016-06
New Economics Papers: this item is included in nep-mac and nep-net
Note: AP CF ME
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Citations: View citations in EconPapers (16)

Published as Marco Di Maggio & Marcin Kacperczyk, 2016. "The unintended consequences of the zero lower bound policy," Journal of Financial Economics, .

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Journal Article: The unintended consequences of the zero lower bound policy (2017)
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