Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/334859 
Year of Publication: 
2025
Citation: 
[Journal:] Review of Financial Economics [ISSN:] 1873-5924 [Volume:] 44 [Issue:] 1 [Article No.:] e70033 [Publisher:] Wiley [Place:] Hoboken, NJ [Year:] 2025
Publisher: 
Wiley, Hoboken, NJ
Abstract: 
The US Federal Reserve System (Fed) eliminated reserve requirements for banks in March 2020 during the first quarter of the COVID‐19 pandemic to foster bank lending through expansionary monetary policy. However, we find empirical evidence that the reserve requirements elimination was not able to support bank lending but instead increased the liquidity of US banks. Moreover, the reserve requirements elimination increased the overall profitability of banks but decreased the profitability from net interest income as measured by net interest margin. Our study offers guidance for policy‐makers in taking appropriate monetary policy measures during pandemics like the COVID‐19 pandemic.
Subjects: 
COVID‐19
fed funds rate
lending
liquidity
monetary policy
profitability
reserve requirements
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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