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Liquidity & Risk Management: Results of a Survey of Large Irish-Domiciled Funds

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  • Daly, Pierce

    (Central Bank of Ireland)

  • Moloney, Kitty

    (Central Bank of Ireland)

Abstract

This article examines the liquidity and risk management practices of large Irishdomiciled bond, mixed and money market funds. These funds are an important part of the credit intermediation chain. The 2008 crisis highlights the role of this sector as a transmission mechanism for systemic risk. Consequently, liquidity remains a concern for Central Banks and regulators. We find some evidence that regulation has reduced market liquidity. Considering run-risk, we highlight that large funds generally consist of institutional investors, not retail, and offer daily redemptions. We also analyse the types of liquidity management tools implemented, and find those used are pre-emptive in nature.

Suggested Citation

  • Daly, Pierce & Moloney, Kitty, 2017. "Liquidity & Risk Management: Results of a Survey of Large Irish-Domiciled Funds," Quarterly Bulletin Articles, Central Bank of Ireland, pages 48-62, July.
    • Handle: RePEc:cbi:qtbart:y:2017:m:07:p:48-62
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    References listed on IDEAS

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    5. Christensen, Jens H.E. & Lopez, Jose A. & Rudebusch, Glenn D., 2015. "A probability-based stress test of Federal Reserve assets and income," Journal of Monetary Economics, Elsevier, vol. 73(C), pages 26-43.
    6. Vergote, Olivier & Studener, Werner & Efthymiadis, Ioannis & Merriman, Niall, 2010. "Main drivers of the ECB financial accounts and ECB financial strength over the first 11 years," Occasional Paper Series 111, European Central Bank.
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    Cited by:

    1. Gianstefani, Ilaria & Metadjer, Naoise & Moloney, Kitty, 2023. "Interest Rate Sensitivity of Irish Bond Funds," Financial Stability Notes 10/FS/23, Central Bank of Ireland.
    2. Dunne, Peter & Emter, Lorenz & Fecht, Falko & Giuliana, Raffaele & Peia, Oana, 2023. "Financial fragility in open-ended mutual funds: the role of liquidity management tools," ESRB Working Paper Series 140, European Systemic Risk Board.

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