Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/278647 
Year of Publication: 
2023
Series/Report no.: 
ECB Working Paper No. 2825
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
Using a sample of open-end corporate bond funds domiciled in the euro area, we exploit the COVID-19 market turmoil in March 2020 to examine two channels through which liquidity buffers can reduce procyclicality in the investment fund sector. First, we find that liquidity buffers reduced outflows during March 2020 only to a limited extent. Second, we find that funds entering the crisis with higher liquidity buffers were less likely to involve in cash hoarding and more likely to use cash buffers to meet outflows. Our results suggest that higher liquidity buffers can reduce procyclicality primarily through supporting the liquidity management strategies employed by fund managers.
Subjects: 
corporate bond funds
investor redemptions
liquidity management
COVID-19 pandemic
JEL: 
G01
G11
G23
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-6110-3
Document Type: 
Working Paper

Files in This Item:
File
Size





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