George Kiss

Date of Award

Spring 2019

Degree

MS

Advisor

Jan Kregel, Ph.D.

Abstract

The analysis undertaken within this thesis questions the role of money market mutual funds (MMFs) in the shadow-banking sector since the 2010 and 2014 SEC reforms. In order to conduct such an analysis we provide a comprehensive history of the rise of these funds and how they contributed to the 2007-2009 Financial Crisis. A brief explanation of the 2010 and 2014 reforms is then given and we show that neither of these regulations have made these funds safer, but have increased the risk they pose to the overall financial system. We evaluate how the maturity distribution of securities held within MMF portfolios has been altered toward an emphasis on commercial paper. Further analysis is provided on how these funds have responded to the regulations in relation to their holdings of commercial paper. The percentage of commercial paper outstanding held in their portfolios, with fewer funds, is roughly equivalent to the amount held in 2008. Additionally, an alternative interpretation is given for the reaction of investors with the threat of a market downturn in relation to share redemptions. Finally, we provide an alternative policy proposal yielding a safer and more resilient MMF industry.

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Open Access

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Economics Commons

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