Banks as Lenders of First Resort: Evidence from the COVID-19 Crisis / Lei Li, Philip E. Strahan, Song Zhang.

Format:

Book

Author/Creator:

Li, Lei.

Contributor:

National Bureau of Economic Research.

Strahan, Philip E.

Zhang, Song.

Series:

Working Paper Series (National Bureau of Economic Research) no. w27256.

NBER working paper series no. w27256

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2020.

Summary:

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.

Notes:

Print version record

May 2020.