When Safe Proved Risky
Commercial Paper during the Financial Crisis of 2007-2009
Bibliographic Data
| ID | 4029113 |
|---|---|
| Authors | Marcin Kacperczyk (0000-0002-8395-5325, Stern School of Business, New York University, New York, New York; National Bureau of Economic Research, Cambridge, Massachusetts.), Philipp Schnabl (New York University) |
| Year | 2010 |
| Volume | 24 |
| Issue | 1 |
| Pages | 29-50 |
| Publication date | 2010-02-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Journal of Economic Perspectives (JOURNAL) |
| Journal identifiers | ISSN: 0895-3309 • E-ISSN: 1944-7965 |
| Publisher | American Economic Association (PUBLISHER • US) |
| DOI | 10.1257/jep.24.1.29 |
| OpenAlex | W3125080144 |
| Language | EN |
| Citations received | 14 |
| References cited | 8 |
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
Business · Commercial bank · Debt · Economics · Financial crisis · Financial economics · Financial system · Interest rate · Issuer · Market liquidity · Money market · Safe haven · Banking stability, regulation, efficiency · Economic Theory and Policy · Global Financial Crisis and Policies · Finance
Crisis and Responses
Deciphering the Liquidity and Credit Crunch 2007-2008
What Caused Chicago Bank Failures in the Great Depression? A Look at the 1920s
Post-crisis NCM Theory Adaptations
Securitized banking and the run on repo
The European banks’ role in the financial crisis of 2007-8
An Introduction to Slow Money and its Gandhian Roots
Return of money or return on money? Analyzing asset concentration of local government investment pool portfolios
Geopolitical spillover
Liquidity Crisis and Financial Contagion in 2007-2009
A Knight for the Modern Age — Some Reflections Inspired by Amar Bhidé’s Uncertainty and Enterprise
AIG in Hindsight
Financial Intermediation and Macroeconomic Analysis
Prone to Fail
| Unique citing works | 14 |
|---|---|
| Citations per year | 0,82 |
| Citation span | 2009 - 2025 (17) |
| Citation velocity | recent |
| Highly cited | No |
| Citation types | Neutral: 11 |