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Securities Lending as Wholesale Funding: Evidence from the U.S. Life Insurance Industry / Nathan Foley-Fisher, Borghan Narajabad, Stephane Verani.
- Format:
- Book
- Author/Creator:
- Foley-Fisher, Nathan.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w22774.
- NBER working paper series no. w22774
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- Securities Lending as Wholesale Funding
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2016.
- Summary:
- The existing literature assumes that securities lenders primarily respond to demand from securities borrowers and reinvest their cash collateral in short-term markets. We offer compelling evidence for a supply channel, using new data matching U.S. life insurers' individual bond lending and reinvestment decisions to the universe of securities lending transactions. We show that an insurer's decision to lend a bond is positively correlated with liquidity transformation in its lending program, even after controlling for demand for that bond. We discuss how using securities lending cash collateral as a source of wholesale funding might impair securities markets in times of stress.
- Notes:
- Print version record
- October 2016.
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