Money Market Fund Stress in March 2020 and March 2023: Fund Characteristics, Investor Flows, and Implications for SEC Reforms

We compare redemptions from money market funds in March 2020 and March 2023, evaluating how institutional prime fund outflows were amplified by liquidity transformation and the subsequent systemic reliance on emergency facilities such as the MMLF (Allen et al., 2023; Ma et al., 2022). It uses weekly SEC Form N-MFP filings at the share-class level, with fund fixed effects, lagged-asset weights, and inference clustered by sponsor family using a wild cluster bootstrap. While the March 2020 turmoil was characterized by systemic runs necessitating unprecedented liquidity intervention (Li et al., 2021), the 2023 episode highlighted persistent vulnerabilities in investor behavior despite the maturation of the regulatory framework (Richmond et al., 2022). Although yield-seeking behavior remained the primary catalyst for asset migration during both periods, the 2023 banking turmoil demonstrated that structural incentives for liquidity transformation persist even when flight-to-safety dynamics are less pronounced (Nikolaou, 2025). The March 2020 episode followed the pandemic shock, whereas the March 2023 episode followed the failure shock of Silicon Valley Bank and Signature Bank, revealing that institutional investors continue to prioritize rapid liquidation over portfolio stability during periods of concentrated sectoral stress. In the worst week of March 2023, institutional prime money market funds experienced substantial outflows that again underscored the inherent fragility of liquidity transformation, even in the absence of the broad market panic observed during the early stages of the pandemic (Kacperczyk & Schnabl, 2013).