Plausibly Exogenous [1561] - Funding Liquidity (05/12/2024)

LHS Variable
Market liquidity

RHS Variable
Funding liquidity

Source of Exogenous Variation
Advent of new credit default swap (CDS) trading conventions in April 2009—the CDS Big Bang. After the Big Bang, traders are required to pay upfront fees to execute CDS transactions, with the size of the fees depending on the level of CDS spreads

- Wang, Wu, Yan, and Zhong (2021), “Funding liquidity shocks in a quasi-experiment: Evidence from the CDS Big Bang”