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Who’s Lending in the Federal Funds Market?

Author

Listed:
  • Gara M. Afonso
  • Alex Entz
  • Eric LeSueur

Abstract

The fed funds market is important to the framework and implementation of U.S. monetary policy. The Federal Open Market Committee sets a target level or range for the fed funds rate and directs the Trading Desk of the New York Fed to create ?conditions in reserve markets? that will encourage fed funds to trade at the target level. In this post, we use various publicly available data sources to estimate the size and composition of fed funds lending activity. We find that the fed funds market has shrunk considerably since the financial crisis and that lending activity is now dominated by one group of market participants.

Suggested Citation

  • Gara M. Afonso & Alex Entz & Eric LeSueur, 2013. "Who’s Lending in the Federal Funds Market?," Liberty Street Economics 20131202, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:86908
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    File URL: https://libertystreeteconomics.newyorkfed.org/2013/12/whos-lending-in-the-fed-funds-market.html
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    Cited by:

    1. Roc Armenter & Benjamin Lester, 2017. "Excess Reserves and Monetary Policy Implementation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 23, pages 212-235, January.
    2. Rod Garratt & Antoine Martin & James J. McAndrews & Ed Nosal, 2015. "Segregated balance accounts," Staff Reports 730, Federal Reserve Bank of New York.
    3. Zoltan Pozsar, 2014. "Shadow Banking: The Money View," Working Papers 14-04, Office of Financial Research, US Department of the Treasury.
    4. Joseph E. Gagnon & Brian Sack, 2014. "Monetary Policy with Abundant Liquidity: A New Operating Framework for the Fed," Policy Briefs PB14-4, Peterson Institute for International Economics.
    5. Lawrence Kreicher & Robert N McCauley & Philip Wooldridge, 2014. "Benchmark tipping in the global bond market," BIS Working Papers 466, Bank for International Settlements.

    More about this item

    Keywords

    Fed funds; lending;

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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