Discount window borrowing after 2003: The explicit reduction in implicit costs

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• 作者：Erhan Artuç ; Selva Demiralp
• 关键词：Discount window ; Primary credit ; Federal funds market
• 刊名：Journal of Banking and Finance
• 出版年：2010
• 出版时间：April 2010
• 年：2010
• 卷：34
• 期：4
• 页码：825-833
• 全文大小：373 K

文摘

In 2003, the Federal Reserve introduced primary credit as its main discount window lending program. This program replaced the adjustment credit program, which, subject to a number of restrictions, had generated a stigma associated with borrowing from the Federal Reserve. Lessening the stigma of borrowing was viewed as essential for reducing the reluctance to borrow from the Federal Reserve. We develop a structural model of daily borrowing. Using this model, we estimate the implicit cost associated with borrowing. Our results suggest that the stigma of borrowing is significantly reduced.