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Securitization and Bank Efficiency

In: Empirical Research in Banking and Corporate Finance

Author

Listed:
  • Zhizhen Chen
  • Frank Hong Liu
  • Jin Peng
  • Haofei Zhang
  • Mingming Zhou

Abstract

We examine whether loan securitization has an impact on bank efficiency. Using a sample of large US commercial banks from 2002 to 2012, we find that bank loan securitization has a significant and positive impact on bank efficiency, and this relationship is stronger for banks with higher capital ratios, higher default risk, and lower level of liquidity and diversification. Our results are robust to Heckman self-selection correction and difference-in-difference (DID) analysis. In addition, these results are found mainly in non-mortgage loan securitizations but not in mortgage loan securitizations. Finally, we show that loan sales also have a positive impact on bank efficiency.

Suggested Citation

  • Zhizhen Chen & Frank Hong Liu & Jin Peng & Haofei Zhang & Mingming Zhou, 2022. "Securitization and Bank Efficiency," Advances in Financial Economics, in: Empirical Research in Banking and Corporate Finance, volume 21, pages 191-222, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:afeczz:s1569-373220220000021007
    DOI: 10.1108/S1569-373220220000021007
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