scholarly journals The Evolution of a Financial Crisis : Panic in the Asset-Backed Commercial Paper Market

2009 ◽  
Vol 2009 (36) ◽  
pp. 1-46 ◽  
Author(s):  
Daniel M. Covitz ◽  
◽  
J. Nellie Liang ◽  
Gustavo A. Suárez
Keyword(s):  
Financial Crisis ◽  
Commercial Paper

scholarly journals When Safe Proved Risky: Commercial Paper during the Financial Crisis of 2007–2009

2010 ◽  
Vol 24 (1) ◽  
pp. 29-50 ◽  
Author(s):  
Marcin Kacperczyk ◽  
Philipp Schnabl
Keyword(s):  
Financial Crisis ◽  
Adverse Selection ◽  
Federal Reserve ◽  
Supply And Demand ◽  
Institutional Constraints ◽  
Safe Haven ◽  
Short Term ◽  
Money Market Funds ◽  
Commercial Paper ◽  
Alternative Sources

Commercial paper is a short-term debt instrument issued by large corporations. The commercial paper market has long been viewed as a bastion of high liquidity and low risk. But twice during the financial crisis of 2007–2009, the commercial paper market nearly dried up and ceased being perceived as a safe haven. Major interventions by the Federal Reserve, including large outright purchases of commercial paper, were eventually used to support both issuers of and investors in commercial paper. We will offer an analysis of the commercial paper market during the financial crisis. First, we describe the institutional background of the commercial paper market. Second, we analyze the supply and demand sides of the market. Third, we examine the most important developments during the crisis of 2007–2009. Last, we discuss three explanations of the decline in the commercial paper market: substitution to alternative sources of financing by commercial paper issuers, adverse selection, and institutional constraints among money market funds.

The Evolution of a Financial Crisis: Collapse of the Asset-Backed Commercial Paper Market

2013 ◽  
Vol 68 (3) ◽  
pp. 815-848 ◽  
Author(s):  
DANIEL COVITZ ◽  
NELLIE LIANG ◽  
GUSTAVO A. SUAREZ
Keyword(s):  
Financial Crisis ◽  
Commercial Paper

scholarly journals The Commercial Paper Market, the Fed, and the 2007-2009 Financial Crisis

2009 ◽  
Vol 91 (6) ◽  
Author(s):  
Richard G. Anderson ◽  
Charles S. Gascon
Keyword(s):  
Financial Crisis ◽  
Commercial Paper

Financial crisis solutions in the commercial paper market

2019 ◽  
Vol 45 (2) ◽  
pp. 294-310 ◽  
Author(s):  
Joshua Fairbanks ◽  
Mark Griffiths ◽  
Drew Winters
Keyword(s):  
Financial Crisis ◽  
Financial Institutions ◽  
Design Methodology ◽  
Policy Implications ◽  
Policy Debate ◽  
Content Type ◽  
Money Markets ◽  
Commercial Paper ◽  
Future Policy ◽  
Practical Implications

Purpose The purpose of this paper is to examine programs designed to support the commercial paper market during the financial crisis. Design/methodology/approach The paper analyzes the participants in the two programs to determine why domestic financial institutions chose one program over the other. Findings Domestic financial institutions chose the Temporary Liquidity Guarantee Program over the Commercial Paper Funding Facility (CPFF) while foreign financial institutions chose the CPFF. Practical implications The analysis is intended to support future policy debate on how to address a liquidity crisis in the money markets. Originality/value The authors are the first paper to examine the participants in these two programs. The value is the policy implications of this study.

3. Securitized banking

2016 ◽  
pp. 43-53
Author(s):  
John Goddard ◽  
John O. S. Wilson
Keyword(s):  
Financial Crisis ◽  
Business Model ◽  
Global Financial Crisis ◽  
Short Term ◽  
Commercial Paper ◽  
Set Up ◽  
The Global Financial Crisis

Preceding the global financial crisis of 2007–09, an alternative business model of banking evolved. An important element in the development of the securitized banking model was a growing tendency for banks to rely less heavily on deposits as a source of short-term finance, and more heavily on other sources such as the repo market, commercial paper, and derivatives. ‘Securitized banking’ explains that having raised short-term funding through these means, the bank can deploy the funds to support loans to borrowers such as house purchasers. Often a bank will bundle a large number of loans together and sell the package to a Structured Investment Vehicle set up by the bank to administer the loans.

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