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Discussion Paper
Do Low Rates Encourage Yield Seeking by Money Market Funds?
La Spada, Gabriele (2018-03-07)
The term “reach for yield” refers to investors’ tendency to buy riskier assets in hopes of securing higher returns. Do low rates on safe assets encourage such yield-seeking behavior, particularly among U.S. prime money market funds (MMFs)? In a forthcoming paper in the Journal of Financial Economics, I develop a model of MMF competition to understand whether competitive pressure leads these funds to reach for yield in a low-rate environment like the current one. I test the model’s predictions on the 2002-08 period and show that, after controlling for changes in risk premia, declines ...
Liberty Street Economics , Paper 20180307

Journal Article
The market for federal funds
Maerowitz, Seth P. (1981-07)
An abstract for this article is not available.
Economic Review , Volume 67 , Issue Jul , Pages 3-7

Working Paper
Avoiding runs in money market mutual funds: have regulatory reforms reduced the potential for a crash?
Collins, Sean; Mack, Phillip R. (1994)
Finance and Economics Discussion Series , Paper 94-14

Report
The minimum balance at risk: a proposal to mitigate the systemic risks posed by money market funds
Cipriani, Marco; Holscher, Michael; Martin, Antoine; McCabe, Patrick E. (2012-07-01)
This paper introduces a proposal for money market fund (MMF) reform that could mitigate systemic risks arising from these funds by protecting shareholders, such as retail investors, who do not redeem quickly from distressed funds. Our proposal would require that a small fraction of each MMF investor's recent balances, called the "minimum balance at risk" (MBR), be demarcated to absorb losses if the fund is liquidated. Most regular transactions in the fund would be unaffected, but redemptions of the MBR would be delayed for thirty days. A key feature of the proposal is that large redemptions ...
Staff Reports , Paper 564

Discussion Paper
Monetary Policy Transmission and the Size of the Money Market Fund Industry: An Update
Afonso, Gara; Cipriani, Marco; Huang, Catherine; Hussein, Abduelwahab; La Spada, Gabriele (2023-04-03)
The size of the money market fund (MMF) industry co-moves with the monetary policy cycle. In a post published in 2019, we showed that this co-movement is likely due to the stronger response of MMF yields to monetary policy tightening relative to bank deposit rates, combined with MMF shares and bank deposits being close substitutes from an investor’s perspective. In this post, we update the analysis and zoom in to the current monetary policy tightening by the Federal Reserve.
Liberty Street Economics , Paper 20230403

Working Paper
Liquidity Shocks, Dollar Funding Costs, and the Bank Lending Channel during the European Sovereign Crisis
Zlate, Andrei; Correa, Ricardo; Sapriza, Horacio (2016-09-30)
This paper documents a new type of cross-border bank lending channel using a novel dataset on the balance sheets of U.S. branches of foreign banks and their syndicated loans. We show that: (1) The U.S. branches of euro-area banks suffered a liquidity shock in the form of reduced access to large time deposits during the European sovereign debt crisis in 2011. The shock was related to their euro-area affiliation rather than to country- or bank-specific characteristics. (2) The affected branches received additional funding from their parent banks, but not enough to offset the lost deposits. (3) ...
Supervisory Research and Analysis Working Papers , Paper RPA 16-4

Conference Paper
What are large U.S. banks doing in taxable money market mutual funds?
Kane, Edward J. (1995)
Proceedings , Paper 441

Monograph
Instruments of the money market (foreword)
Cook, Timothy Q.; LaRoche, Robert K. (1993)
Monograph

Journal Article
On the offensive
Zimmerman, Gary C.; Eccles, Jennifer (1983)
FRBSF Economic Letter

Working Paper
Bank Deposit Flows to Money Market Funds and ON RRP Usage during Monetary Policy Tightening
Zlate, Andrei; Tase, Manjola (2022-09-02)
Using the historical experience from past monetary tightening cycles and the market-expected path of the federal funds rate for the current tightening cycle, we project that the flows from bank deposits to money market funds (MMFs) would be relatively small, at about $600 billion through the end of 2024, or about 3 percent of current bank deposits. Of these potential inflows to MMFs, about $100 billion are projected to flow into the overnight reverse repo (ON RRP) facility, or about 7 percent of MMFsâ€™ recent take-up. Other factors such as the private demand for repo funding and the ...
Finance and Economics Discussion Series , Paper 2022-060

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