Securitization and lending standards

Evidence from the European wholesale loan market

Alper Kara, David Marques-Ibanez, Steven Ongena

Research output: Working paper

Abstract

We assess the 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 that were more active at originating asset-backed securities did not price their loans more aggressively (i.e. with narrower lending spreads) than less-active banks. Using a unique feature of our dataset, 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 results suggest that while the credit cycle seems to have a major impact of lending standards, the effect of securitization activity appears to be very limited.
Original languageEnglish
PublisherBoard of Governors of the Federal Reserve System
Number of pages36
Publication statusPublished - Aug 2015
Externally publishedYes

Publication series

NameInternational Finance Discussion Papers
PublisherBoard of Governors of the Federal Reserve System
No.1141

Fingerprint

Securitization
Loans
Lending
Bank lending
Bank crises
Syndicated loans
Credit cycle
Asset-backed securities

Cite this

Kara, A., Marques-Ibanez, D., & Ongena, S. (2015). Securitization and lending standards: Evidence from the European wholesale loan market. (1141 ed.) (International Finance Discussion Papers ; No. 1141). Board of Governors of the Federal Reserve System.
Kara, Alper ; Marques-Ibanez, David ; Ongena, Steven. / Securitization and lending standards : Evidence from the European wholesale loan market. 1141. ed. Board of Governors of the Federal Reserve System, 2015. (International Finance Discussion Papers ; 1141).
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Kara, A, Marques-Ibanez, D & Ongena, S 2015 'Securitization and lending standards: Evidence from the European wholesale loan market' International Finance Discussion Papers , no. 1141, 1141 edn, Board of Governors of the Federal Reserve System.

Securitization and lending standards : Evidence from the European wholesale loan market. / Kara, Alper; Marques-Ibanez, David; Ongena, Steven.

1141. ed. Board of Governors of the Federal Reserve System, 2015. (International Finance Discussion Papers ; No. 1141).

Research output: Working paper

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Kara A, Marques-Ibanez D, Ongena S. Securitization and lending standards: Evidence from the European wholesale loan market. 1141 ed. Board of Governors of the Federal Reserve System. 2015 Aug. (International Finance Discussion Papers ; 1141).