Corporate Funding in a Liquidity Crisis: Commercial Paper and Central Bank Interventions

Seminar abstract

We study the determinants of the liquidity dry-up in the commercial paper market in March 2020 and the role of central bank interventions in reviving the market. We show that the dry-up was driven by money market funds (MMFs) - the key investors in the EU commercial paper market - that faced investor outflows. Using security-level fund holdings, we establish that the liquidity crisis in MMFs affected corporate funding: non-financial companies were less likely to issue commercial paper if their commercial paper was held by funds experiencing larger investor outflows. We show that the revival of the market was driven by the ECB's intervention in the European non-financial commercial paper market leading to better terms and conditions for eligible firms.

How to join this seminar

This seminar is free to attend and will take place online on Wednesday 9 November 2022 at 2pm.

Please contact Dr Anna Sarkisyan for details on how to join us online.

Speaker bio

Glenn Schepens 

Glenn Schepens is a Senior Economist at the Financial Research Department of the European Central Bank. His main research focuses on banking and financial intermediation, with a particular interest in central bank policies and financial regulation. His papers have been published in the Review of Financial Studies, the Journal of Financial Economics, the Journal of Financial Intermediation, and the Review of Finance, among others.