The explosive growth of the ABCP market between 2004 and 2007: A “search for yield” story

Article


Lysandrou, Photis and Shabani, M. 2018. The explosive growth of the ABCP market between 2004 and 2007: A “search for yield” story. Journal of Post Keynesian Economics. 41 (4), pp. 526-546. https://doi.org/10.1080/01603477.2018.1494504
AuthorsLysandrou, Photis and Shabani, M.
Abstract

The years immediately preceding the financial crisis of 2007 witnessed an explosive growth in the supplies both of the long-term securities issued by the shadow banking entities, the asset-backed securities (ABSs) and collateralized debt obligations (CDOs), and of the short-term securities issued by these entities, notably asset-backed commercial paper (ABCP). Although there is now some acknowledgment that the search for yield was the major driver of ABS and CDO growth in the United States, the same is not true of the U.S. ABCP market where other factors such as regulatory arbitrage on the part of banks or the safety and liquidity concerns of institutional investors are seen as having been the more important growth driving force. This article argues that the search for yield did play a crucial role in U.S. ABCP growth between 2004 and 2007. To back up this argument, the article points to four variables that were closely correlated with this growth: the federal funds rate; U.S. money market mutual funds asset holdings; the change in the geographical breakdown of the institutions supplying ABCP; and, finally, the change in the program breakdown of the ABCP market.

JournalJournal of Post Keynesian Economics
Journal citation41 (4), pp. 526-546
ISSN0160-3477
Year2018
PublisherTaylor & Francis
Accepted author manuscript
License
Digital Object Identifier (DOI)https://doi.org/10.1080/01603477.2018.1494504
Web address (URL)https://doi.org/10.1080/01603477.2018.1494504
Publication dates
Online05 Oct 2018
Publication process dates
Deposited22 Oct 2018
Accepted08 Jun 2018
Accepted08 Jun 2018
Copyright information© 2018 Taylor & Francis. This is an Accepted Manuscript of an article published by Taylor & Francis in Journal of Post Keynesian Economics on 05/10/2018, available online: http://www.tandfonline.com/10.1080/01603477.2018.1494504.
Permalink -

https://repository.uel.ac.uk/item/8465y

Download files


Accepted author manuscript
7622.pdf
License: All rights reserved

  • 173
    total views
  • 277
    total downloads
  • 2
    views this month
  • 0
    downloads this month

Export as

Related outputs

Geography and business models of global banks
D'Avino, C. and Shabani, M. 2024. Geography and business models of global banks. in: D'Avino, C. and Shabani, M. (ed.) International Banking in Global Perspective Routledge Taylor & Francis Group. pp. 141-157
Spatial dependence via the internal capital markets of US global banks
D'Avino, C. and Shabani, M. 2023. Spatial dependence via the internal capital markets of US global banks. Journal of Money, Credit and Banking. In Press. https://doi.org/10.1111/jmcb.13101
Booking positions in small offshore financial centers: Focus on US global banks
D’Avino, C. and Shabani, M. 2023. Booking positions in small offshore financial centers: Focus on US global banks. International Journal of Banking, Accounting and Finance. 14 (1), pp. 28-57. https://doi.org/10.1504/IJBAAF.2024.137095
An evolution of global and regional banking networks: A focus on Japanese banks’ international expansion
Harrison, M., Nakajima, J. and Shabani, M. 2023. An evolution of global and regional banking networks: A focus on Japanese banks’ international expansion. Journal of International Financial Markets, Institutions and Money. 83, p. 101717. https://doi.org/10.1016/j.intfin.2022.101717
Banks During the Pandemic: A Japanese Perspective
Shabani, M. 2022. Banks During the Pandemic: A Japanese Perspective. Journal of Economic Issues. 56 (2), pp. 371-377. https://doi.org/10.1080/00213624.2022.2055942
Bank Liquidity Creation: A New Global Dataset for Developing and Emerging Countries
D’Avino, C., Girardin, E. and Shabani, M. 2022. Bank Liquidity Creation: A New Global Dataset for Developing and Emerging Countries. Review of World Economics. 158, pp. 529-570. https://doi.org/10.1007/s10290-021-00434-1
The Distribution of Dividends of Multinational Banks Operating in Latin America
Shabani, M. 2021. The Distribution of Dividends of Multinational Banks Operating in Latin America. in: Levy-Orlik, N., Bustamante-Torres, J. A. and Rochon, L-P. (ed.) Capital Movements and Corporate Dominance in Latin America: Reduced Growth and Increased Instability Edward Elgar Publishing. pp. 72-88
The explosive growth of the US ABCP market between 2004 and 2007: an integrated empirical analysis
Lysandrou, P., Shabani, M. and D’Avino, C. 2020. The explosive growth of the US ABCP market between 2004 and 2007: an integrated empirical analysis. The Quarterly Review of Economics and Finance. 85, pp. 31-46. https://doi.org/10.1016/j.qref.2020.10.026
The Japanese balance sheet recession 20 years on: Abenomics – economic revival or corporate financialisation?
Bikas, K., Karwowski, Ewa and Shabani, M. 2020. The Japanese balance sheet recession 20 years on: Abenomics – economic revival or corporate financialisation? in: Stenfors, A. and Toporowski, J. (ed.) Unconventional Monetary Policy and Financial Stability: The Case of Japan Routledge. pp. 66-87
Japanese banks in the international money markets
Shabani, M., Stenfors, A. and Toporowski, J. 2020. Japanese banks in the international money markets. in: Stenfors, A. and Toporowski, J. (ed.) Unconventional Monetary Policy and Financial Stability : The Case of Japan Routledge. pp. 54-65
A new approach to measuring universal banking
Shabani, M. and D'Avino, C. 2020. A new approach to measuring universal banking. Bulletin of Economic Research. 72 (4), pp. 353-379. https://doi.org/10.1111/boer.12261
Dimensions and Determinants of Financialisation: Comparing OECD Countries since 1997
Karwowski, E., Shabani, M. and Stockhammer, E. 2019. Dimensions and Determinants of Financialisation: Comparing OECD Countries since 1997. New Political Economy. 25 (6), pp. 957-977. https://doi.org/10.1080/13563467.2019.1664446
Too Big to Manage: US Megabanks’ Competition by Innovation and the Microfoundations of Financialization
Cerpa Vielma, N., Cömert, H., D’Avino, C., Dymski, G., Kaltenbrunner, A., Petratou, E. and Shabani, M. 2019. Too Big to Manage: US Megabanks’ Competition by Innovation and the Microfoundations of Financialization. Cambridge Journal of Economics. 43 (4), p. 1103–1121. https://doi.org/10.1093/cje/bez027
Financial systems in financial crisis — An analysis of banking systems in the EU
Detzer, Daniel, Creel, Jerome, Labondance, Fabien, Levasseur, Sandrine, Shabani, M., Toporowski, Jan, Tyson, Judith, Consolandi, Costanza, Gabbi, Giampaolo, Matthias, Massimo, Vozzella, Pietro, Carrasco, Carlos A., Peinado, Patricia and Rodriguez Gonzalez, Carlos A. 2014. Financial systems in financial crisis — An analysis of banking systems in the EU. Intereconomics. 49 (2), pp. 56-87. https://doi.org/10.1007/s10272-014-0489-8
A Nobel Prize for the Empirical Analysis of Asset Prices
Shabani, M. and Toporowski, Jan 2014. A Nobel Prize for the Empirical Analysis of Asset Prices. Review of Political Economy. 27 (1), pp. 62-85. https://doi.org/10.1080/09538259.2014.961283
On the geography of bubbles and financial crises
Dymski, Gary A. and Shabani, M. 2017. On the geography of bubbles and financial crises. in: Martin, Ron and Pollard, Jane (ed.) Handbook on the Geographies of Money and Finance Cheltenham Edward Elgar Publishing. pp. 29-50
Monetary adjustment and inflation of financial claims in the UK after 1980
Lepper, John, Shabani, M., Toporowski, Jan and Tyson, Judith 2016. Monetary adjustment and inflation of financial claims in the UK after 1980. in: Hein, Eckhard, Detzer, Daniel and Dodig, Nina (ed.) Financialisation and the Financial and Economic Crises Cheltenham Edward Elgar Publishing. pp. 68-88