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Update from the Office of Financial Research

Today, the U.S. Treasury Office of Financial Research (OFR) published a working paper, "The Effects of the Volcker Rule on Corporate Bond Trading: Evidence from the Underwriting Exemption."

This paper examines the impact of the Volcker rule, which bans proprietary trading by commercial banks and their affiliates, with some exceptions. It finds evidence that the rule has increased the cost of liquidity provided by firms it covers, but not decreased the firms’ exposure to liquidity risk. It also finds that the rule has decreased the market share of covered firms. Customers appear to be trading more with non-bank dealers, who are exempt from the Volcker rule but also cannot borrow at the Federal Reserve’s discount window. (Working Paper no. 19-02)

This working paper can be found here:

The OFR website can be found here: 
Other OFR Working Papers can be found here:

Thank you for your interest in the work of the OFR.


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