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Local versus aggregate lending channels: the effects of securitization on corporate credit supply

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  • Gabriel Jiménez

    ()
    (Banco de España)

  • Atif Mian

    (University of California Berkeley)

  • José-Luis Peydró

    (ECB and UPF and Barcelona GSE)

  • Jesús Saurina

    ()
    (Banco de España)

Abstract

While banks may change their credit supply due to bank balance-sheet shocks (the local lending channel), firms can react by adjusting their sources of financing in equilibrium (the aggregate lending channel). We provide a methodology to identify the aggregate (firm-level) effects of the lending channel and estimate the impact of banks’ ability to securitize realestate assets on credit supply for non real-estate firms in Spain over 2000-2010. We show that firm-level equilibrium dynamics nullify the strong local (bank-level) lending channel of securitization on credit quantity for firms with multiple banking relationships. Credit terms however become softer, but there are no real effects. Securitization implies a credit expansion on the extensive margin towards first-time bank clients, which are more likely to default. Finally, the 2008 securitization collapse reverses the local lending channel.

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File URL: http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/11/Fich/dt1124e.pdf
File Function: First version, October 2011
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Bibliographic Info

Paper provided by Banco de Espa�a in its series Banco de Espa�a Working Papers with number 1124.

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Length: 60 pages
Date of creation: Oct 2011
Date of revision:
Handle: RePEc:bde:wpaper:1124

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Related research

Keywords: Bank lending channel; credit supply; credit demand; macroprudential; real economy effects of finance; securitization;

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Cited by:
  1. Bealey, Timothy & Meads, Neil & Surico, Paolo, 2010. "Risk heterogeneity and credit supply: evidence from the mortgage market," MPRA Paper 20905, University Library of Munich, Germany.
  2. Jiménez, G. & Ongena, S. & Peydro, J.L. & Saurina, J., 2012. "Macroprudential Policy, Countercyclical Bank Capital Buffers and Credit Supply: Evidence from the Spanish Dynamic Provisioning Experiments," Discussion Paper 2012-036, Tilburg University, Center for Economic Research.

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