Template-Type: ReDIF-Article 1.0
Author-Name: Matteo Aquilina
Author-Name: Giulio Cornelli
Author-Name: Nikola Tarashev
Title: Commonality under pressure: banks and funds
Abstract: We study the joint evolution of financial strain at banks and investment funds. When market pressure on banks intensifies from an elevated level, net flows decline at open-ended corporate bond mutual funds (MFs), corporate bond exchange-traded funds (ETFs) and prime money market funds alike. This commonality has risen materially over time for all three fund types. That said, bond ETFs can be a stabilising force, as salient features of their business model help attract investor inflows in times of stress. By contrast, outflows from bond MFs tend to contribute to a tightening of market conditions when banks are already under pressure.
Journal: BIS Quarterly Review
File-URL: http://www.bis.org/publ/qtrpdf/r_qt2503e.pdf
File-Format: Application/pdf
File-URL: http://www.bis.org/publ/qtrpdf/r_qt2503e.htm
File-Format: text/html
Year: 2025
Month: March
Classification-JEL: G21, G22, G23
Handle: RePEc:bis:bisqtr:2503e