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Report
Investors’ appetite for money-like assets: the money market fund industry after the 2014 regulatory reform
This paper uses a quasi-natural experiment to estimate the premium investors are willing to pay to hold money-like assets. The 2014 SEC reform of the money market fund (MMF) industry reduced the money-likeness only of prime MMFs, by increasing the information sensitivity of their shares, and left government MMFs unaffected. As a result, investors fled from prime to government MMFs, with total outflows exceeding $1 trillion. By comparing investors’ response to the regulatory change with past episodes of industry dislocation (for example, the 2008 MMF run), we highlight the difference between ...
Speech
Modern recipes for financial crises
Remarks at the University of Iowa, December 4, 2015.