Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/241162 
Year of Publication: 
2021
Series/Report no.: 
Staff Report No. 969
Publisher: 
Federal Reserve Bank of New York, New York, NY
Abstract: 
We use confidential and novel data to measure the benefit to broker-dealers of being affiliated with a bank holding company and the resulting access to internal sources of funding. We accomplish this by comparing the balance sheets of broker-dealers that are associated with bank holding companies to those that are not and we find that the latter dramatically re-structured their balance sheets during the 2007-09 financial crisis, pivoting away from trading illiquid assets and toward more liquid government securities. Specifically, we estimate that broker-dealers that are not associated with bank holding companies both increased repo as a share of total assets by 10 percentage points and also increased the share of long inventory devoted to government securities by 15 percentage points, relative to broker-dealers associated with bank holding companies.
Subjects: 
broker-dealers
shadow banking
liquidity risk
repo market
JEL: 
G2
G21
G23
Document Type: 
Working Paper

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