Discussion Paper

Bank Borrowings by Asset Managers Evidence from U.S. Open-End Mutual Funds and Exchange-Traded Funds

Abstract: In this note, we look into investment funds' access to and usage of bank credit, based on a new dataset on credit line (and other types of loan) extension by top bank holding companies to open-end mutual funds and ETFs in the United States. We find that the aggregate amount of bank lending to open-end funds and ETFs was small and greatly fluctuated across time. Bank credit, particularly in the form of credit lines, has offered funds a flexible liquidity source from which they can draw down cash in times of excessive fund outflows, such as during the onset of the COVID-19 pandemic outbreak. In particular, funds that hold relatively more illiquid assets, such as bank loan funds, are more reliant on bank credit lines.

https://doi.org/10.17016/2380-7172.2887

Bibliographic Information

Provider: Board of Governors of the Federal Reserve System (U.S.)

Part of Series: FEDS Notes

Publication Date: 2021-04-16

Number: 2021-04-16-2