Securitization and lending standards: Evidence from the wholesale loan market

Alper Kara, David Marques-Ibanez, Steven Ongena

Research output: Working paper

Abstract

We investigate the effect of securitization activity on banks’ lending standards using evidence from pricing behavior on the syndicated loan market. We find that banks more active at originating asset-backed securities are also more aggressive on their loan pricing practices.This suggests that securitization activity lead to laxer credit standards. Macroeconomic factors also play a large role explaining the impact of securitization activity on bank lending standards:banks more active in the securitization markets loosened more aggressively their lendingstandards in the run up to the recent financial crisis but also tightened more strongly during the crisis period. As a continuum of this paper we are examining whether individual loans that are eventually securitized are priced more aggressively by using unique European data on individual loans from all major trustees.
LanguageEnglish
PublisherEuropean Central Bank
Number of pages38
ISBN (Electronic)1725-2806
Publication statusPublished - Jul 2011
Externally publishedYes

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Securitization
Loans
Lending
Bank lending
Loan pricing
Macroeconomic factors
Pricing behaviour
Financial crisis
Syndicated loans
Asset-backed securities
Credit

Cite this

Kara, A., Marques-Ibanez, D., & Ongena, S. (2011). Securitization and lending standards: Evidence from the wholesale loan market. (1362 ed.) European Central Bank.
Kara, Alper ; Marques-Ibanez, David ; Ongena, Steven. / Securitization and lending standards : Evidence from the wholesale loan market. 1362. ed. European Central Bank, 2011.
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Kara, A, Marques-Ibanez, D & Ongena, S 2011 'Securitization and lending standards: Evidence from the wholesale loan market' 1362 edn, European Central Bank.

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

1362. ed. European Central Bank, 2011.

Research output: Working paper

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Kara A, Marques-Ibanez D, Ongena S. Securitization and lending standards: Evidence from the wholesale loan market. 1362 ed. European Central Bank. 2011 Jul.