TY - JOUR
T1 - Securitization and lending standards
T2 - Evidence from the European wholesale loan market
AU - Kara, Alper
AU - Marques-Ibanez, David
AU - Ongena, Steven
PY - 2016/10/1
Y1 - 2016/10/1
N2 - We assess the relative effect of securitization activity on banks’ lending rates employing a uniquely detailed dataset from the euro-denominated syndicated loan market. We find that in the run-up to the 2007–2009 crisis banks more active at originating asset-backed securities did not price their loans more aggressively (i.e. with narrower lending spreads) than non-active banks. We show that also within the set of loans that were previously securitized, the relative level of securitization activity by the originating bank is not related to narrower lending spreads. Our findings, which are limited to the cross-sectional impact of securitization, suggest that the effect of securitization on the cost of corporate funding appears to be quite limited.
AB - We assess the relative effect of securitization activity on banks’ lending rates employing a uniquely detailed dataset from the euro-denominated syndicated loan market. We find that in the run-up to the 2007–2009 crisis banks more active at originating asset-backed securities did not price their loans more aggressively (i.e. with narrower lending spreads) than non-active banks. We show that also within the set of loans that were previously securitized, the relative level of securitization activity by the originating bank is not related to narrower lending spreads. Our findings, which are limited to the cross-sectional impact of securitization, suggest that the effect of securitization on the cost of corporate funding appears to be quite limited.
KW - Securitization
KW - Lending standards
KW - Syndicated loans
KW - Financial crisis
UR - https://www.scopus.com/inward/record.uri?eid=2-s2.0-84984838402&doi=10.1016%2fj.jfs.2016.07.004&partnerID=40&md5=896b5510aa914de49a8535cefc7c8dca
U2 - 10.1016/j.jfs.2016.07.004
DO - 10.1016/j.jfs.2016.07.004
M3 - Article
VL - 26
SP - 107
EP - 127
JO - Journal of Financial Stability
JF - Journal of Financial Stability
SN - 1572-3089
ER -