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Geopolitical spillover: The Russia–Ukraine invasion and its effects on money market funds

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  • Keshav, Vaibhav
  • Vaidya, Meghana

Abstract

This study is the first to examine the impact of the Russia–Ukraine Conflict on the United States (US) Money Market Fund (MMF) industry. Using granular data, we observe a significant outflow of $22 billion in US Prime MMFs compared to government MMFs. This suggests a “flight for safety” among investors. We report no prime MMF asset outflows in the European MMFs. Our results are robust for various fund-level controls and multiple fixed effects. This study provides new insights into how geopolitical events, like the Russia–Ukraine conflict, affect capital markets. Finally, we discuss its implications for investors, policymakers, and regulators concerned about maintaining financial stability during geopolitical turmoil.

Suggested Citation

  • Keshav, Vaibhav & Vaidya, Meghana, 2025. "Geopolitical spillover: The Russia–Ukraine invasion and its effects on money market funds," European Journal of Political Economy, Elsevier, vol. 89(C).
    • Handle: RePEc:eee:poleco:v:89:y:2025:i:c:s0176268025000941
    DOI: 10.1016/j.ejpoleco.2025.102734
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    JEL classification:

    • 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
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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