The Finance Brown Bag Seminar is held by the Institute for Finance, Banking and Insurance (WU Vienna) and the Vienna Graduate School of Finance (VGSF). It serves as a presentation platform for PhD students, faculty members, and visitors. An overview of BBS on the website of the Institute for Finance, Banking and Insurance.
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Roberto Pinto, Lancaster University
Non-financial firms as liquidity providers to banks: Evidence from the unsecured money market
We study the liquidity provision activities by non-financial firms to banks in the short-term wholesale unsecured money market (UMM). Using transaction-level data from the ECB, we document that non-financial firms act as one of the major liquidity providers to banks in the UMM, with daily trading volume of €9 billion. Firms in the UMM lend almost half of their cash to banks mainly through call accounts and term deposits, and mainly to domestic banks. Using the Covid-19 outbreak as a shock to firms’ cash demand, we show that greater cash demand leads to greater liquidity provisions, especially for firms more resilient to the Covid-19. More resilient firms provide liquidity with longer maturities, have more lending transactions, and lend to more banks.
