Template-Type: ReDIF-Paper 1.0
Title: Banks' Trading After the Lehman Crisis - The Role of Unconventional Monetary Policy
Author-Name: Isabel Schnabel
Author-Email: isabel.schnabel@uni-bonn.de
Author-Name: Johannes Tischer
Author-Email: johannes.tischer@bundesbank.de
Classification-JEL: E44, E50, G01, G11, G21
Keywords: Proprietary trading, fire sales, flight to liquidity, Lehman crisis, market liquidity, unconventional monetary policy

Abstract: Based on a unique trade-level dataset, we analyze the proprietary trading reaction of German banks to the Lehman collapse
and the subsequent unconventional monetary policy measures in 2008. After the Lehman collapse, we observe that market liquidity tightened.
However, there is no evidence of broad-based fire sales in the German banking sector. Instead, we observe a flight to liquidity. 
The European Central Bank’s unconventional measures had a strong impact on banks’ trading behavior by inducing shifts towards eligible securities 
and reducing pressure on market liquidity. This suggests that the unconventional measures helped stabilizing the financial system after the Lehman collapse. 

Note: 
Length: 44
Creation-Date: 2018-08
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp036
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2018_036