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Money Market Funds Intermediation, Bank Instability, and Contagion

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Bibliographic Details
Other Authors: Martin, Antoine [Other] • Parigi, Bruno Maria [Other]
Type of Resource: E-Book
Language: English
[S.l.] SSRN [2013]
Series: FRB of New York Staff Report
Source: Verbunddaten SWB
Lizenzfreie Online-Ressourcen
Summary: In recent years, U.S. banks have increasingly relied on deposits from financial intermediaries, especially money market funds (MMFs), which collect funds from large institutional investors and lend them to banks. In this paper, we show that intermediation through MMFs allows investors to limit their exposure to a given bank (i.e., reap gains from diversification). However, since MMFs are themselves subject to runs from their own investors, a banking system intermediated through MMFs is more unstable than one in which investors interact directly with banks. A mechanism through which instability can arise in an MMF-intermediated financial system is the release of private information on bank assets, which is aggregated by MMFs and could lead them to withdraw en masse from a bank. In addition, we show that MMF intermediation can also be a channel of contagion among banking institutions
Item Description: Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments February 1, 2013 erstellt
Physical Description: 1 Online-Ressource (31 p)
DOI: 10.2139/ssrn.2213314
Access: Open Access