I am interested in the impacts of a debt crisis on the tracking ability of an ETF.
In particular I have read that the market makers for ETFs often take on large short-term loans in order to create or redeem large groups of shares of an ETF. This is conceivably necessary because purchasing the 50,000 shares of an ETF needed for redemption is not a small investment.
To what extent are market-makers dependent on loans to benefit from arbitrage in ETF-mistracking? And, in a credit crisis, would these sort of loans be expected to stop, or are they "reliable" enough that they would still go on?