Interfund Lending in Mutual Fund Families: Role in Liquidity Management

2019 ◽  
Vol 32 (10) ◽  
pp. 4079-4115 ◽  
Author(s):  
Vikas Agarwal ◽  
Haibei Zhao
Keyword(s):  
Mutual Fund ◽  
Liquidity Management ◽  
Oxford University ◽  
Money Market Funds ◽  
Equity Funds ◽  
Fund Families ◽  
Mutual Fund Families ◽  
Editorial Decision ◽  
Mutual Fund Family ◽  
Published Paper

Abstract The Investment Company Act of 1940 restricts interfund lending and borrowing within a mutual fund family, but families can apply for regulatory exemptions to participate in such transactions. We find that the monitoring mechanisms and investment restrictions influence the family’s decision to apply for the interfund lending programs. We document several benefits of such programs for equity funds. First, participating funds reduce cash holdings and increase investments in illiquid assets. Second, fund investors exhibit less run-like behavior. Third, it helps mitigate asset fire sales after extreme investor redemptions. Offsetting these benefits, money market funds in participating families experience investor outflows. Received May 26, 2018; editorial decision November 27, 2018 by Editor Itay Goldstein. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Co-Insurance in Mutual Fund Families

2012 ◽  
Author(s):  
Luis Goncalves-Pinto ◽  
Breno Schmidt
Keyword(s):  
Mutual Fund ◽  
Fund Families ◽  
Mutual Fund Families

scholarly journals Multinational Banks and Supranational Supervision

2018 ◽  
Vol 32 (8) ◽  
pp. 2997-3035 ◽  
Author(s):  
Giacomo Calzolari ◽  
Jean-Edouard Colliard ◽  
Gyongyi Lóránth
Keyword(s):  
Organizational Structure ◽  
Organizational Structures ◽  
Unintended Consequences ◽  
Coordination Failures ◽  
The Public ◽  
Oxford University ◽  
Multinational Banks ◽  
Editorial Decision ◽  
Public Costs ◽  
Published Paper

Abstract Supervision of multinational banks (MNBs) by national supervisors suffers from coordination failures. We show that supranational supervision solves this problem and decreases the public costs of an MNB’s failure, taking its organizational structure as given. However, the MNB strategically adjusts its structure to supranational supervision. It converts its subsidiary into a branch (or vice versa) to reduce supervisory monitoring. We identify the cases in which this endogenous reaction leads to unintended consequences, such as higher public costs and lower welfare. Current reforms should consider that MNBs adapt their organizational structures to changes in supervision. Received January 9, 2017; editorial decision September 15, 2018 by Editor Philip Strahan. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

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