Banks as Lenders of First Resort: Evidence from the COVID-19 Crisis
National Bureau of Economic Research Working Paper Series
; No. 27256, 2020.
Article
in English
| NBER | ID: grc-748185
ABSTRACT
In March of 2020, banks faced the largest increase in liquidity demands ever observed. Firms drew funds on a massive scale from pre-existing credit lines and loan commitments in anticipation of cash flow disruptions from the economic shutdown designed to contain the COVID-19 crisis. The increase in liquidity demands was concentrated at the largest banks, who serve the largest firms. Pre-crisis financial condition did not limit banks’ liquidity supply. Coincident inflows of funds to banks from both the Federal Reserve’s liquidity injection programs and from depositors, along with strong pre-shock bank capital, explain why banks were able to accommodate these liquidity demands.
Full text:
Available
Collection:
Databases of international organizations
Database:
NBER
Language:
English
Journal:
National Bureau of Economic Research Working Paper Series
Year:
2020
Document Type:
Article
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