Money Market Funds Research Articles

Bank-Level Political Risk and the CD Rates Required by Money Market Funds

Bank-Level Political Risk and the CD Rates Required by Money Market Funds

Extending the theory of planned behavior to identify students’ investment intentions in internet money market funds

Extending the theory of planned behavior to identify students’ investment intentions in internet money market funds

Assessing the contribution of shadow banking to systemic risk in South Africa during COVID-19

Background: Systemic risk studies in the coronavirus disease 2019 (COVID-19) period focus mostly on the banking sector. Regulators however, yearn for data on the contribution of shadow banking to systemic risk during the pandemic.Aim: The primary goal of the study is to determine the contribution of shadow banking to systemic risk during the COVID-19 period in South Africa.Setting: The study focussed on shadow banking, non-bank financial institutions involved in credit intermediation outside the traditional banking system in South Africa.Method: Systemic risk is measured by conditional value-at-risk methodology using monthly market returns of fixed-income funds, funds-of-funds, money market funds and multi-asset funds from January 2015 to December 2021.Results: Shadow banking contributed to systemic risk during COVID-19, and systemic risk reached an all-time high during the onset of the pandemic. Money market funds exhibited higher systemic risk because of the COVID-19 shock. However, multi-asset funds and funds-of-funds are the classes that contributed more to systemic risk during the COVID-19 period. Furthermore, systemic risk trends of multi-asset funds and funds-of-funds increased with the rise in COVID-19 infections, except in the third wave when systemic risk peaked months after the surge in COVID-19 cases.Conclusion: Shadow banking contributes to systemic risk in South Africa and systemic risk peaked during the COVID-19 period.Contribution: There is growing evidence on systemic risk during COVID-19, and this study extends the focus to shadow banking. It draws attention of regulators to credit intermediation outside traditional banks.

An Analysis of Cash Management with Reference to Deccan Industries

Cash management refers to a broad area of finance involving the collection, handling, and usage of cash. It involves assessing market liquidity, cash flow, and investments. In banking, cash management, or treasury management, is a marketing term for certain services related to cash flow offered primarily to larger business customers. It may be used to describe all bank accounts (such as checking accounts) provided to businesses of a certain size, but it is more often used to describe specific services such as cash concentration, zero balance accounting, and automated clearing house facilities. Sometimes, private banking customers are given cash management services. Financial instruments involved in cash management include money market funds, treasury bills, and certificates. Cash management essentially means dealing with an organization's cash so its use provides the most value to the business. This can mean planning to keep the right amount of cash on hand as well as making plans for the cash the company does not need to have available for business operations. Cash managers plan for, protect, and invest cash assets. Basic parts of planning for efficient cash management include knowing how much cash should be on hand, efficiently handling cash transactions, and investing any surplus cash in securities that will grow the value of the company's money.

Empirical Study on the Influencing Factors of Liquidity Risk in International Money Market Funds

In the past two years, new funds issuance has been extremely hot, and the total scale of public offering funds has also increased significantly. Behind the extremely hot issuance of new funds, it also gave birth to a number of “hotstyle” funds. But at the same time, a number of “hotstyle” funds have also encountered a large number of redemption phenomenon, making a large number of young investors get the title of “leek zero”. This paper returns the quarterly data of 28 money market funds, analyzes the factors affecting money market fund liquidity risk, and obtains the relationship between each influencing factor and the liquidity risk of money market fund. Then it put forward the establishment of a liquidity monitoring an dearly warning mechanism for money market funds, strengthen the risk tips for investors and improve the subscription and redemption fees.

Money Market Funds and N-CR Regulations

In an attempt to make money markets safer and more resilient, regulators have created new requirements for market participants. Money market funds are now required to file a new N-CR form if a significant event occurs: for example, fund financial support or liquidity fees. We investigate whether fund stakeholders respond to the N-CR filings. We find that investors do not respond to the N-CR filings. However, fund managers, who do not need the filings to learn of the financial support, reduce the weighted average life (WAL) of the funds and increase the daily liquidity available. These actions have real costs and our results suggest the costs outweigh the benefit of the newly required Form N-CR (N-CR) filing.

Digital payment, money market fund and investment behavior

Does digital payment affect the flow patterns in money market funds? In recent years, some money market funds (MMFs) have been introduced to digital payment platforms. The users can hold these MMFs and directly use them for transactions. This additional liquidity may influence investor behavior. Using individual-level data from the world's largest digital payment platform Alipay, this paper investigates the impact of digital payment on flow patterns in MMFs. We show that compared with traditional MMFs, the MMFs combined with digital payment are more attractive to investors, and flows in these MMFs are less sensitive to their past performances. Furthermore, in the period with high illiquidity, digital payment decreases the outflows from MMFs, indicating that digital payment potentially decreases liquidity risk and enhances the stability of the money market.

Analysis of the Effects of Money Market Fund Mobilization on the Dynamics of Nigerian Economic Growth

Economic growth is a function of some productive efforts among which savings mobilizations is considered very vital. This study examines savings mobilization strategy and its impact on Nigeria’s economic growth during the year 2001-2022.This is vested with the objectives to investigate the effect of banking density, savings rates and money supply on economic growth. The study relies on time series data sourced from the publication of the Central Bank of Nigeria. Gross Domestic Product Growth Rate (GDPGR) was adopted as dependent variable, while Banking Density (BD), Savings Rates (SR) and Money Supply (MS) were the independent variables. Augmented Dickey Fuller (ADF) unit root test was employed, to test the stationarity. The Auto Regressive Distributive Lag (ADRL) was used to ascertain the relationship between the variables alongside Vector Error Correction Model (VCM). Post estimation diagnostic tools used include Breuch-Godfrey serial correlation LM test and the CUSUM test for stability. From the ARDL, β-coefficient and the associated probabilities were adopted to determine the extent and direction of relationship on economic growth. Data were tested at 5% level of significance; it was discovered that banking density and savings rates affected economic growth positively but with insignificant effects, while money supply affected economic growth negatively with insignificant effect. The study therefore recommends amongst others, that stakeholders, be directed towards entrenching higher banking density as opposed to banking desert, and that money supply should be made dynamic in accordance with economic realities.

Explaining the Life Cycle of Bank-Sponsored Money Market Funds: An Application of the Regulatory Dialectic

Explaining the Life Cycle of Bank-Sponsored Money Market Funds: An Application of the Regulatory Dialectic

Stablecoins, Money Market Funds and Monetary Policy

Stablecoins, Money Market Funds and Monetary Policy

Asset Price Bubbles and Systemic Risk: Evidence from Money Market Funds

Asset Price Bubbles and Systemic Risk: Evidence from Money Market Funds

Econometric Analysis of the Determinants of Redemption Flows on French Money Market Funds During the 2020 Crisis

Econometric Analysis of the Determinants of Redemption Flows on French Money Market Funds During the 2020 Crisis

Explaining the Life Cycle of Bank-Sponsored Money Market Funds:An Application of the Regulatory Dialectic

Explaining the Life Cycle of Bank-Sponsored Money Market Funds:An Application of the Regulatory Dialectic

Analysis of the Profit Model of Internet Money Market Funds Based on the Characteristics of Internet Economy–Taking balance treasure as an example

Analysis of the Profit Model of Internet Money Market Funds Based on the Characteristics of Internet Economy–Taking balance treasure as an example

Detailed Analysis of the Portfolios of French Money Market Funds During the COVID-19 Crisis in Early 2020

Detailed Analysis of the Portfolios of French Money Market Funds During the COVID-19 Crisis in Early 2020

Individual investment adaptations to COVID-19 lockdowns

Utilizing online wealth management data from Ant Financial and manually curated data from COVID-19 lockdown regions in China, this study sheds light on the impact of COVID-19 lockdowns on individual investment pattern. Applying a Staggered Difference-in-Differences methodology, we find significant decrease in both the volume and proportion of individual holdings in risky mutual funds after their initial exposure to lockdowns. This decline mainly corresponds to a decrease in risky mutual fund purchases and an increase in redemptions. Mechanism analysis reveals this change is due to a notable decrease in individuals’ overall assets during lockdowns, leading to a higher allocation toward risk-free money market funds. Heterogeneity analysis highlights these impacts are more pronounced among individuals with lower risk tolerance. Additionally, there is a notable drop in individuals’ equity fund holdings. The lockdowns prompt a conservative shift in individuals’ wealth strategies.

Money Market Fund Repo and the ON RRP Facility

Between January 2021 and June 2022, money market funds' (MMFs') investments in the Federal Reserve's Overnight Reverse Repurchase (ON RRP) facility rose by $2 trillion, while their private repo lending fell by almost $500 billion. These sizable shifts give us an opportunity to examine how monetary policy implementation and the ON RRP facility interact with the private repo market.

You can’t always get what you want (where you want it): Cross-border effects of the US money market fund reform

This paper documents significant cross-border effects of the 2014 US money market fund (MMF) reform on euro area MMFs. As US-based prime funds became less money-like due to the reform, euro area-based prime funds received large inflows from foreign investors. These cross-border flows were mainly motivated by the search for stable NAV instruments. Consistent with an easing of competitive pressure, euro area prime MMFs reduced their risk-taking. Lastly, the 2017 EU MMF regulation, a weaker regulatory intervention compared to the US reform, did not lead to a reversal of the documented cross-border flows.

The response of money market fund investors and managers to government shutdowns

The response of money market fund investors and managers to government shutdowns

Money market reforms:The effect on the commercial paper market

This study examines the effects of the 2016 Securities and Exchange Commission (SEC) reforms of Money Market Funds (MMFs) on the commercial paper market. By exploiting the differential time effect, we document a rise in the commercial paper (CP) rates. The rise in CP rates is more pronounced when the shadow floating NAV period starts and is similar across different types of commercial paper. Our cross-sectional analysis finds support for relationship-based lending in both commercial paper holdings and rates. We find that big issuers experienced a decrease and small issuers observed an increase in commercial paper outstanding from MMFs in the post-period. We find no evidence that rates vary across the size of the issuer in the post-period. Finally, financial institutions pay higher rates in the post-period than non-financial institutions.