The Quality of Banks at Stigmatized Lending Facilities
AbstractWhen the names of banks that borrow from an emergency lending facility are inadvertently leaked, the facility may become stigmatized. We examine how the quality of the borrowing pool of banks changed when stigma was unexpectedly introduced at a once confidential lending facility during the Great Depression. This facility experienced a compositional shift in the quality of its borrowing pool, where only weaker banks that maintained smaller liquidity buffers used the facility, while an alternative confidential facility attracted stronger banks. Our results shed light on how the design of lending facilities may attract certain types of banks.
CitationAnbil, Sriya, and Angela Vossmeyer. 2019. "The Quality of Banks at Stigmatized Lending Facilities." AEA Papers and Proceedings, 109: 506-10. DOI: 10.1257/pandp.20191093
- G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
- G23 Pension Funds; Non-bank Financial Institutions; Financial Instruments; Institutional Investors
- N22 Economic History: Financial Markets and Institutions: U.S.; Canada: 1913-