Who borrows from money market funds?

Classifying all borrowers in about two thirds of the $9 trillion global money market fund (MMF) market, we document that MMFs extend funding primarily to banks and governments. Funding to other non-bank financial institutions (NBFIs) and non-financial corporates is a much smaller fraction of MMFs' assets. When monetary policy tightens, MMF assets increase by about 34 cents for every dollar of bank deposit contraction. MMFs allocate most of this increase to either governments or banks, and only a marginal share to other NBFIs, likely funding arbitrage trades by hedge funds. These findings cast doubt on the assumption, prevalent in the literature, that MMF funding enables other NBFIs to offset a material portion of the contraction in banks' credit supply when rates rise.