Events Calendar

Join us to hear from Chuck Fang, Drexel University.  His presentation is titled, "Monetary Policy Transmissions through Bond Fund Flows". 

Abstract: I show that bond mutual funds and ETFs (“bond funds”) amplify the bond market transmission of monetary policy. During monetary tightening, bond funds experience large outflows of return-chasing capital and scale down their bond holdings much more than traditional bond investors such as insurance companies. In the cross section of firms, in response to monetary tightening, those held more by bond funds experience greater yield increase, issue less debt, and contract more on equity payout or real investment. For identification, I use a shift-share instrument to capture plausibly exogenous variation in bond fund ownership coming from fund growth and portfolio scaling over long horizons. I show evidence that the secular rise of bond funds has significantly amplified the monetary sensitivity of aggregate bond yields and aggregate real investment.

 The Clarence Tow Lectures in Finance Series brings high-profile researchers to Tippie College of Business to present to an audience of faculty, PhD students, and researchers from around the University of Iowa.