The Unintended Consequences of the Zero Lower Bound Policy
NBER Working Paper No. 22351
Issued in June 2016
NBER Program(s):Asset Pricing, Corporate Finance, Monetary Economics
We study the impact of the zero lower bound interest rate policy on the industrial organization of the U.S. money fund industry. We find that in response to policies that maintain low interest rates, money funds: change their product offerings by investing in riskier asset classes; are more likely to exit the market; and reduce the fees they charge their investors. The consequence of fund closures resulting from interest rate policy is the relocation of resources in affected fund families and in the asset management industry in general, as well as decline in capital of issuers borrowing from money funds.
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Document Object Identifier (DOI): 10.3386/w22351
Published: Marco Di Maggio & Marcin Kacperczyk, 2016. "The unintended consequences of the zero lower bound policy," Journal of Financial Economics, . citation courtesy of
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