The Response of Money Market Funds to the COVID-19 Pandemic

Kyle D. Allen; Ahmed Baig; Drew B. Winters

doi:10.1016/j.frl.2023.103790

The Response of Money Market Funds to the COVID-19 Pandemic

Kyle D. Allen, Ahmed Baig, Drew B. Winters

Finance Department

Texas Tech University

Research output: Contribution to journal › Article › peer-review

2 Scopus citations

Abstract

The Covid-19 Pandemic has increased the attention paid to money market funds. Using Covid-19 cases and a measure of lockdowns, shutdowns, etc., we analyze if money market fund investors and managers responded to the intensity of the pandemic. We ask whether or not the Federal Reserve implementation of the Money Market Mutual Fund Liquidity Facility (MMLF) had an effect on market participant behavior. We find that institutional prime investors responded significantly to the MMLF. Fund managers responded to the intensity of the pandemic but largely ignored the reduction in uncertainty created by the implementation of the MMLF.

Original language	American English
Article number	103790
Journal	Finance Research Letters
Volume	54
DOIs	https://doi.org/10.1016/j.frl.2023.103790
State	Published - Jun 2023

Keywords

COVID-19
Mangers
Money market funds
Money markets
Retail investors

EGS Disciplines

Finance and Financial Management

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10.1016/j.frl.2023.103790

https://scholarworks.boisestate.edu/finance_facpubs/36License: Other
https://scholarworks.boisestate.edu/cgi/viewcontent.cgi?article=1035&context=finance_facpubsLicense: Unspecified

Cite this

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title = "The Response of Money Market Funds to the COVID-19 Pandemic",

abstract = "The Covid-19 Pandemic has increased the attention paid to money market funds. Using Covid-19 cases and a measure of lockdowns, shutdowns, etc., we analyze if money market fund investors and managers responded to the intensity of the pandemic. We ask whether or not the Federal Reserve implementation of the Money Market Mutual Fund Liquidity Facility (MMLF) had an effect on market participant behavior. We find that institutional prime investors responded significantly to the MMLF. Fund managers responded to the intensity of the pandemic but largely ignored the reduction in uncertainty created by the implementation of the MMLF.",

keywords = "COVID-19, Mangers, Money market funds, Money markets, Retail investors",

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AU - Baig, Ahmed

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N2 - The Covid-19 Pandemic has increased the attention paid to money market funds. Using Covid-19 cases and a measure of lockdowns, shutdowns, etc., we analyze if money market fund investors and managers responded to the intensity of the pandemic. We ask whether or not the Federal Reserve implementation of the Money Market Mutual Fund Liquidity Facility (MMLF) had an effect on market participant behavior. We find that institutional prime investors responded significantly to the MMLF. Fund managers responded to the intensity of the pandemic but largely ignored the reduction in uncertainty created by the implementation of the MMLF.

AB - The Covid-19 Pandemic has increased the attention paid to money market funds. Using Covid-19 cases and a measure of lockdowns, shutdowns, etc., we analyze if money market fund investors and managers responded to the intensity of the pandemic. We ask whether or not the Federal Reserve implementation of the Money Market Mutual Fund Liquidity Facility (MMLF) had an effect on market participant behavior. We find that institutional prime investors responded significantly to the MMLF. Fund managers responded to the intensity of the pandemic but largely ignored the reduction in uncertainty created by the implementation of the MMLF.

KW - COVID-19

KW - Mangers

KW - Money market funds

KW - Money markets

KW - Retail investors

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VL - 54

JO - Finance Research Letters

JF - Finance Research Letters

M1 - 103790

ER -

The Response of Money Market Funds to the COVID-19 Pandemic

Abstract

Keywords

EGS Disciplines

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