Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/60736 
Year of Publication: 
2011
Series/Report no.: 
Staff Report No. 483
Publisher: 
Federal Reserve Bank of New York, New York, NY
Abstract: 
We provide empirical evidence for the existence, magnitude, and economic impact of stigma associated with banks borrowing from the Federal Reserve's discount window facility. We find that, during the height of the financial crisis, banks were willing to pay an average premium of at least 37 basis points (and 150 basis points after Lehman's bankruptcy) to borrow from the Term Auction Facility rather than from the discount window. The incidence of stigma varied according to bank characteristics and market conditions. Finally, we find that discount window stigma is economically relevant since it increased banks' borrowing costs during the crisis. Our results have important implications for the provision of liquidity by central banks.
Subjects: 
discount window
Term Auction Facility
stigma
crisis
monetary policy
JEL: 
G01
G28
G21
G12
Document Type: 
Working Paper

Files in This Item:
File
Size
344.52 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.