Consequences of Mandated Bank Liquidity Disclosures

Kleymenova, Anya

doi:10.2139/ssrn.2737499

Cited by 13 publications

(13 citation statements)

References 45 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…Armantier et al (2014) extend this result by showing that banks are willing to pay a premium to avoid borrowing from the discount window. Finally, Kleymenova (2013) finds little evidence of stigma after the disclosure of discount window borrowers on March 31, 2011. 6 A possible reason for the lack of stigma in 2011 is that the disclosure occurred well after the acute stage of the financial crisis had ended.…”

Section: Introductionmentioning

confidence: 94%

See 1 more Smart Citation

Managing Stigma during a Financial Crisis

Anbil

2017

FEDS

View full text Add to dashboard Cite

How should regulators design effective emergency lending facilities to mitigate stigma during a financial crisis? I explore this question using data from an unexpected disclosure of partial lists of banks that secretly borrowed from the lender of last resort during the Great Depression. I find evidence of stigma in that depositors withdrew more deposits from banks included on the lists in comparison with banks left off the lists. However, stigma dissipated for banks that were revealed earlier after subsequent banks were revealed. Overall, the results suggest that an emergency lending facility that never reveals bank identities would mitigate stigma. (JEL Codes: G01, G21, G28)

show abstract

Section: Introductionmentioning

confidence: 94%

“…New lending programs created by the Fed during the recent crisis provided such a coordination mechanism.6Kleymenova (2013) finds that the disclosure decreased bid-ask spreads and banks' cost of capital. Bloomberg News filed a lawsuit under the Freedom of Information Act to gain access to the names of…”

mentioning

confidence: 99%

Managing Stigma during a Financial Crisis

Anbil

2017

FEDS

View full text Add to dashboard Cite

show abstract

“…On the empirical side, a well-known example is the work of Furfine (2003). More recently, study discount window stigma during the 2007-08 financial crisis (see also Kleymenova (2016)), and Anbil (forthcoming) and Vossmeyer (2016) take a historical perspective and study the effects of the disclosure of borrowing activity at the Reconstruction Finance Corporation (RFC) during the Great Depression.…”

Section: Introductionmentioning

confidence: 99%

“…As a result, banks were willing to accept (and indeed experience) significant extra cost in terms of interest payments in order to avoid the stigma associated with borrowing from the discount window. 2 Using data also from the crisis and the 2012 court-mandated disclosure of discount window activity by some banks, Kleymenova (2016) finds no evidence of discount window stigma affecting the cost of funding of those banks in capital markets (but she does not rule out possible effects in the interbank market). At the same time, she finds that banks' behavior changed in ways consistent 1 Klee (2011) discusses selection effects that can complicate the measurement of discount window stigma using market interest rates, with an application to the 2007-08 financial crisis in the U.S.…”

Section: Introductionmentioning

confidence: 99%

Interventions in Markets with Adverse Selection: Implications for Discount Window Stigma

Ennis¹

2017

View full text Add to dashboard Cite

I study the implications for central bank discount window stigma of the model by Philippon and Skreta (2012). I take an equilibrium perspective for a given discount window program instead of following the program-design approach of the original paper. This allows me to narrow the focus on the model's positive predictions. In the model, firms (banks) need to borrow to finance a productive project. There is limited liability and firms have private information about their ability to repay their debts. This creates an adverse selection problem. The central bank can ameliorate the impact of adverse selection by lending to firms. Discount window borrowing is observable and it may be taken as a signal of firms' credit worthiness. Under some conditions, firms borrowing from the discount window may pay higher interest rates to borrow in the market, a phenomenon often associated with the presence of stigma. I discuss these and other outcomes in detail and what they suggest about the relevance of stigma as an empirical phenomenon.JEL classification: E51, E58, G21, G28

show abstract

“…As a result, banks were willing to accept (and indeed experience) significant extra cost in terms of interest payments in order to avoid the stigma associated with borrowing from the discount window. 3 Using data also from the crisis and the 2012 court-mandated disclosure of discount window activity, Kleymenova (2016) finds no evidence of discount window stigma affecting bank funding costs in capital markets (but she cannot rule out effects in the interbank market). She finds, though, that banks' behavior changed in ways consistent with stigma in response to newly imposed disclosure requirements of discount window activity.…”

mentioning

confidence: 99%

Interventions in Markets with Adverse Selection: Implications for Discount Window Stigma

Ennis¹

2018

J of Money Credit Banking

View full text Add to dashboard Cite

I study the implications for central bank discount window stigma of a workhorse model of adverse selection in financial markets. In the model, firms (banks) need to borrow to finance a productive project. There is limited liability and firms have private information about their ability to repay their debts, which gives rise to the possibility of adverse selection. The central bank can ameliorate the impact of adverse selection by lending to firms. Discount window borrowing is observable and it may be taken as a signal of firms' credit worthiness. Under some conditions, firms borrowing from the discount window may pay higher interest rates to borrow in the market, a phenomenon often associated with the presence of stigma. I discuss these and other outcomes in detail and what they suggest about the relevance of stigma as an empirical phenomenon.

show abstract

Consequences of Mandated Bank Liquidity Disclosures

Cited by 13 publications

References 45 publications

Managing Stigma during a Financial Crisis

Managing Stigma during a Financial Crisis

Interventions in Markets with Adverse Selection: Implications for Discount Window Stigma

Interventions in Markets with Adverse Selection: Implications for Discount Window Stigma

Contact Info

Product

Resources

About