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Are retail prime money market fund investors increasingly more sensitive to stress events?

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  • Anadu, Kenechukwu
  • Levin, John
  • Lu, Lina
  • Malfroy-Camine, Antoine
  • Oefele, Nico

Abstract

U.S. prime money market mutual funds have experienced two episodes of bank-like runs, in 2008 and 2020, driven primarily by institutional investors. Using impulse response analysis, we examine the degree to which retail investors’ redemption sensitivity has evolved over these two stress periods. We find that, on average, net outflows from retail prime MMFs increased from 2008 to 2020. In contrast, over the same period, the magnitude of net outflows from institutional prime MMFs were, on average, relatively unchanged, albeit significantly larger than those from retail funds.

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  • Anadu, Kenechukwu & Levin, John & Lu, Lina & Malfroy-Camine, Antoine & Oefele, Nico, 2025. "Are retail prime money market fund investors increasingly more sensitive to stress events?," Economics Letters, Elsevier, vol. 255(C).
    • Handle: RePEc:eee:ecolet:v:255:y:2025:i:c:s0165176525003118
    DOI: 10.1016/j.econlet.2025.112474
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    1. Marco Cipriani & Gabriele La Spada, 2020. "Sophisticated and Unsophisticated Runs," Staff Reports 956, Federal Reserve Bank of New York.
    2. Kenechukwu E. Anadu & Marco Cipriani & Ryan M. Craver & Gabriele La Spada, 2022. "The Money Market Mutual Fund Liquidity Facility," Economic Policy Review, Federal Reserve Bank of New York, vol. 28(1), July.
    3. Kenechukwu E. Anadu & Pablo D. Azar & Catherine Huang & Marco Cipriani & Thomas M. Eisenbach & Gabriele La Spada & Mattia Landoni & Marco Macchiavelli & Antoine Malfroy-Camine & J. Christina Wang, 2023. "Runs and Flights to Safety: Are Stablecoins the New Money Market Funds?," Supervisory Research and Analysis Working Papers SRA 23-02, Federal Reserve Bank of Boston, revised 26 Mar 2024.
    4. Antoine Bouveret & Antoine Martin & Patrick E. McCabe, 2022. "Money Market Fund Vulnerabilities: A Global Perspective," Staff Reports 1009, Federal Reserve Bank of New York.
    5. Oefele, Nico & Baur, Dirk G. & Smales, Lee A., 2024. "Are stablecoins the money market mutual funds of the future?," Journal of Empirical Finance, Elsevier, vol. 79(C).
    6. Lei Li & Yi Li & Marco Macchiavelli & Xing (Alex) Zhou, 2021. "Liquidity Restrictions, Runs, and Central Bank Interventions: Evidence from Money Market Funds [Dealer financial conditions and lender-of-last-resort facilities]," The Review of Financial Studies, Society for Financial Studies, vol. 34(11), pages 5402-5437.
    7. Òscar Jordà, 2005. "Estimation and Inference of Impulse Responses by Local Projections," American Economic Review, American Economic Association, vol. 95(1), pages 161-182, March.
    8. Dosumu, Oluwatoyin Esther & Sakariyahu, Rilwan & Oyekola, Olayinka & Lawal, Rodiat, 2023. "Panic bank runs, global market contagion and the financial consequences of social media," Economics Letters, Elsevier, vol. 228(C).
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    1. Kenechukwu E. Anadu & Patrick E. McCabe & JP Perez-Sangimino & Nathan Swem, 2026. "A Framework for Understanding the Vulnerabilities of New Money-Like Products," Finance and Economics Discussion Series 2026-002, Board of Governors of the Federal Reserve System (U.S.).

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    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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