Spillovers of funding dry-ups

  • We uncover a new channel for spillovers of funding dry-ups. The 2016 US money market fund (MMF) reform exogenously reduced unsecured MMF funding for some banks. We use novel data to trace those banks to a platform for corporate deposit funding. We show that intensified competition for corporate deposits spilled the funding squeeze over to other banks with no MMF exposure. These banks paid more for deposits, and their pool of funding providers deteriorated. Moreover, their lending volumes and margins declined, and their stocks underperformed. Our results suggest that banks' competitiveness in funding markets affect their competitiveness in lending markets.

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Author:Iñaki Aldasoro, Florian BalkeGND, Andreas BarthGND, Egemen Eren
URN:urn:nbn:de:hebis:30:3-511183
URL:https://ssrn.com/abstract=3450319
DOI:https://doi.org/10.2139/ssrn.3450319
Parent Title (English):SAFE working paper series ; No. 259
Series (Serial Number):SAFE working paper series (259)
Publisher:SAFE
Place of publication:Frankfurt am Main
Document Type:Working Paper
Language:English
Year of Completion:2019
Year of first Publication:2019
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2019/09/12
Tag:competition; corporate deposits; dollar funding; funding dry-ups; money market funds; spillovers
Issue:August 29, 2019
Page Number:56
HeBIS-PPN:453892507
Institutes:Wirtschaftswissenschaften / Wirtschaftswissenschaften
Wissenschaftliche Zentren und koordinierte Programme / House of Finance (HoF)
Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
Wissenschaftliche Zentren und koordinierte Programme / Sustainable Architecture for Finance in Europe (SAFE)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Sammlungen:Universitätspublikationen
Licence (German):License LogoDeutsches Urheberrecht