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Bank behavior with access to credit risk transfer markets Author info | Abstract | Publisher info | Download info | Related research | Statistics Goderis, Benedikt
Marsh, Ian W.
Vall Castello, Judith
Wagner, Wolf (Tilburg University, Center for Economic Research)
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One of the most important recent innovations in financial markets has been the development of credit derivative products that allow banks to more actively manage their credit portfolios than ever before. We analyze the effect that access to these markets has had on the lending behavior of a sample of banks, using a sample of banks that have not accessed these markets as a control group. We find that banks that adopt advanced credit risk management techniques (proxied by the issuance of at least one collateralized loan obligation) experience a permanent increase in their target loan levels of around 50%. Partial adjustment to this target, however, means that the impact on actual loan levels is spread over several years. Our findings confirm the general efficiency enhancing implications of new risk management techniques in a world with frictions suggested in the theoretical literature.
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Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number
100.
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Date of creation: 2006Date of revision:
Handle: RePEc:dgr:kubcen:2006100Contact details of provider: Web page: http://center.uvt.nl
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Find related papers by JEL classification: G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Investment Policy
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Jokivuolle, Esa & Kilponen , Juha & Kuusi, Tero, 2007.
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Bask, Mikael, 2007.
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Laakkonen, Helinä, 2007.
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Beverly Hirtle, 2008.
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