The Unintended Consequences of the Zero Lower Bound Policy
NBER Working Paper No. 22351
Issued in June 2016
NBER Program(s):Asset Pricing Program, Corporate Finance Program, The Monetary Economics Program
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.
A non-technical summary of this paper is available in the August 2016 NBER Digest.
You can sign up to receive the NBER Digest by email.
Supplementary materials for this paper:
Machine-readable bibliographic record -
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
Users who downloaded this paper also downloaded* these:
|DePasquale and Stange
||w22344 Labor Supply Effects of Occupational Regulation: Evidence from the Nurse Licensure Compact
|Maestas, Mullen, and Powell
||w22452 The Effect of Population Aging on Economic Growth, the Labor Force and Productivity
|Page, Schaller, and Simon
||w22394 The Effects of Aggregate and Gender-Specific Labor Demand Shocks on Child Health
|Bettinger, Gurantz, Kawano, and Sacerdote
||w22347 The Long Run Impacts of Merit Aid: Evidence from California’s Cal Grant
|Tauras, Pesko, Huang, Chaloupka, and Farrelly
||w22251 The Effect of Cigarette Prices on Cigarette Sales: Exploring Heterogeneity in Price Elasticities at High and Low Prices