In a companion post, we showed that during the bank run of spring 2023 investors were seemingly not concerned about bank risk broadly but rather became sensitized to the risk of only about a third of all publicly traded banks. In this post, we investigate how the Federal Reserve’s liquidity support affected investor risk perceptions during the run. We find that the announcement of the Fed’s novel Bank Term Funding Program (BTFP), and subsequent borrowings from the program, substantially r...| Liberty Street Economics
A look at how the risk sensitivity of stock market investors evolved during and after the 2023 bank run.| Liberty Street Economics
The authors use data on wholesale and retail payments to understand the bank runs of March 2023.| Liberty Street Economics
Asani Sarkar is a financial research advisor in Financial Intermediation. He is working on issues related to credit intermediation by banks and nonbanks, and financial stability of nonbanks and stablecoins. His paper “Stigma in Financial Markets: Evidence from Liquidity Auctions and Discount Window Borrowing During the Crisis” received the Western Finance Association Pearson Award for the best paper on Financial Institutions and Markets in 2011. Dr. Sarkar’s papers have appeared in many...| www.newyorkfed.org