TY - JOUR
T1 - The impact of the return to lagged reserve requirements on the federal funds market
AU - Kotomin, Vladimir
AU - Winters, Drew B.
N1 - Copyright:
Copyright 2007 Elsevier B.V., All rights reserved.
PY - 2007/3
Y1 - 2007/3
N2 - We examine the impact on the settlement Wednesday effect in daily fed funds rates following the change from contemporaneous reserve requirements (CRR) to lagged reserve requirements (LRR). The Federal Reserve changed from CRR to LRR, in part, to make it easier for banks to settle their reserve accounts. Our hypothesis is that the switch to LRR will reduce the demand for reserves on settlement Wednesdays, thus reducing the settlement Wednesday effect in fed funds rates. Our empirical results provide strong support for our hypothesis.
AB - We examine the impact on the settlement Wednesday effect in daily fed funds rates following the change from contemporaneous reserve requirements (CRR) to lagged reserve requirements (LRR). The Federal Reserve changed from CRR to LRR, in part, to make it easier for banks to settle their reserve accounts. Our hypothesis is that the switch to LRR will reduce the demand for reserves on settlement Wednesdays, thus reducing the settlement Wednesday effect in fed funds rates. Our empirical results provide strong support for our hypothesis.
KW - Reserve requirements
KW - Settlement Wednesday effects
UR - http://www.scopus.com/inward/record.url?scp=33846507170&partnerID=8YFLogxK
U2 - 10.1016/j.jeconbus.2006.02.002
DO - 10.1016/j.jeconbus.2006.02.002
M3 - Article
AN - SCOPUS:33846507170
VL - 59
SP - 111
EP - 129
JO - Journal of Economics and Business
JF - Journal of Economics and Business
SN - 0148-6195
IS - 2
ER -