Discussion Paper

Why Do Banks Feel Discount Window Stigma?

Abstract: Even when banks face acute liquidity shortages, they often appear reluctant to borrow at the New York Fed’s discount window (DW) out of concern that such borrowing may be interpreted as a sign of financial weakness. This phenomenon is often called “DW stigma.” In this post, we explore possible reasons why banks may feel such stigma.

Keywords: banks; stigma; credit; finance; discount window; DW; markets; foreign banks; herding effect;

JEL Classification: G2;

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Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Liberty Street Economics

Publication Date: 2014-01-15

Number: 20140115