10/12/2023 0 Comments How to research in system shock 2(2021) using data on US corporate bond funds, although in our dataset outflows are somewhat smaller as we focus on investment-grade bond funds (investing in both government and corporate bonds).įigure 1 Mutual fund net flows and key events The developments in outflows are similar to the pattern documented by Falato et al. Outflows reached their peak in the week of 16 March 2020. It shows the balance between inflows of cash into the funds and outflows, with negative bars indicating net outflows from the mutual fund sector. 2022, Vissing-Jørgensen 2021).įigure 1 illustrates a run by investors on bond mutual funds investing in euro area securities in March 2020. This quickly spilled over to financial markets, as funds sold off assets in an attempt to obtain liquidity to satisfy large redemption requests from investors (Ma et al. These concerns materialised in March 2020, when investors in bond mutual funds started redeeming their shares on a large scale (e.g. As the importance of non-banks grew, so too did concerns that disruptions in the non-bank sector could lead to significant disruptions in the broader financial markets. Their assets almost doubled during the second decade of the century, rising from €25 trillion in December 2009 to €47 trillion in December 2019 (when they represented 56% of total financial sector assets). Non-bank financial intermediaries are playing an increasingly prominent role in the financial system.
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