Liquidity from Two Lending Facilities

40 Pages Posted: 21 Aug 2017 Last revised: 31 Dec 2018

See all articles by Sriya Anbil

Sriya Anbil

Board of Governors of the Federal Reserve System

Angela Vossmeyer

Claremont McKenna College - Robert Day School of Economics and Finance

Multiple version iconThere are 2 versions of this paper

Date Written: November 16, 2018

Abstract

We examine how the threat of disclosure (stigma) changes the quality of banks that approach
emergency lending facilities. We study a financial crisis where two confidential facilities were
available to banks. Then, an unexpected partial list of bank names from one facility was leaked,
suddenly stigmatizing that facility. We find that the composition of banks that approached each
facility changed, where the newly stigmatized facility attracted weaker banks that maintained
smaller liquidity buffers, while the alternative confidential facility attracted stronger banks.
Our results shed light on how regulators can use disclosure to identify banks that require closer
monitoring.

Keywords: Bayesian inference, discount window, financial crisis, lender of last resort, stigma

JEL Classification: E58, G28, N22

Suggested Citation

Anbil, Sriya and Vossmeyer, Angela, Liquidity from Two Lending Facilities (November 16, 2018). Available at SSRN: https://ssrn.com/abstract=3021272 or http://dx.doi.org/10.2139/ssrn.3021272

Sriya Anbil (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Angela Vossmeyer

Claremont McKenna College - Robert Day School of Economics and Finance ( email )

500 E. Ninth St.
Claremont, CA 91711-6420
United States

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