Lending relationships and credit rationing: the impact of securitization
AbstractDo lending relationships mitigate credit rationing? Does securitization influence the impact of lending relationships on credit rationing? If so, is its impact differently in normal periods versus crisis periods? This paper combines several unique data sets to address these questions. Employing a disequilibrium model to identify credit rationing, we find that more intense lending relationships, measured through their length and lower number, considerable improve credit supply and reduce the degree of credit rationing. In general, we find that a relationship with a bank that is more involved in securitization activities relaxes credit constraints in normal periods; however, it also increases credit rationing during crisis periods. Finally, we study the impact of different types of securitization – covered bonds and mortgage-backed securities (MBS) – on credit rationing. While both types of securitization reduce credit rationing in normal periods, the issuance of MBS by a firm’s main bank aggravates these firm’s credit rationing in crisis periods.
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Bibliographic InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2011-128.
Date of creation: 2011
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lending relationships; financial crisis; securitization;
Other versions of this item:
- Carbó Valverde, Santiago & Degryse, Hans & Rodriguez-Fernandez, Francisco, 2012. "Lending relationships and credit rationing: the impact of securitization," CEPR Discussion Papers 9138, C.E.P.R. Discussion Papers.
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-12-19 (All new papers)
- NEP-BAN-2011-12-19 (Banking)
- NEP-CFN-2011-12-19 (Corporate Finance)
- NEP-FMK-2011-12-19 (Financial Markets)
- NEP-URE-2011-12-19 (Urban & Real Estate Economics)
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