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Examining the microfoundations of market incentives for asset-backed lending

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  • Charles T. Carlstrom
  • Katherine A. Samolyk

Abstract

A review of four papers that model market-based (as opposed to regulatory-based) forces driving the asset-backed lending market, revealing that under certain conditions, the information costs that make financial markets important as conduits of credit can also create nonregulatory incentives for asset-backed lending as an efficient funding mode.

Suggested Citation

  • Charles T. Carlstrom & Katherine A. Samolyk, 1993. "Examining the microfoundations of market incentives for asset-backed lending," Economic Review, Federal Reserve Bank of Cleveland, vol. 29(Q I), pages 27-38.
    • Handle: RePEc:fip:fedcer:y:1993:i:qi:p:27-38:n:v.29no.1
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    References listed on IDEAS

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    1. Benveniste, Lawrence M. & Berger, Allen N., 1987. "Securitization with recourse : An instrument that offers uninsured bank depositors sequential claims," Journal of Banking & Finance, Elsevier, vol. 11(3), pages 403-424, September.
    2. Mark Gertler, 1988. "Financial structure and aggregate economic activity: an overview," Proceedings, Federal Reserve Bank of Cleveland, pages 559-596.
    3. Pennacchi, George G, 1988. " Loan Sales and the Cost of Bank Capital," Journal of Finance, American Finance Association, vol. 43(2), pages 375-396, June.
    4. Carlstrom, Charles T. & Samolyk, Katherine A., 1995. "Loan sales as a response to market-based capital constraints," Journal of Banking & Finance, Elsevier, vol. 19(3-4), pages 627-646, June.
    5. Greenbaum, Stuart I. & Thakor, Anjan V., 1987. "Bank funding modes : Securitization versus deposits," Journal of Banking & Finance, Elsevier, vol. 11(3), pages 379-401, September.
    6. Dilip Mookherjee & Ivan Png, 1989. "Optimal Auditing, Insurance, and Redistribution," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 104(2), pages 399-415.
    7. Bhattacharya Sudipto & Thakor Anjan V., 1993. "Contemporary Banking Theory," Journal of Financial Intermediation, Elsevier, vol. 3(1), pages 2-50, October.
    8. James, Christopher, 1988. "The use of loan sales and standby letters of credit by commercial banks," Journal of Monetary Economics, Elsevier, vol. 22(3), pages 395-422.
    9. Williamson, Stephen D., 1986. "Costly monitoring, financial intermediation, and equilibrium credit rationing," Journal of Monetary Economics, Elsevier, vol. 18(2), pages 159-179, September.
    10. McCulloch, J. Huston, 1981. "Misintermediation and macroeconomic fluctuations," Journal of Monetary Economics, Elsevier, vol. 8(1), pages 103-115.
    11. Ram T. S. Ramakrishnan & Anjan V. Thakor, 1984. "Information Reliability and a Theory of Financial Intermediation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 51(3), pages 415-432.
    12. Douglas W. Diamond, 1984. "Financial Intermediation and Delegated Monitoring," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 51(3), pages 393-414.
    13. Katherine A. Samolyk, 1989. "Portfolio risks and bank asset choice," Working Papers (Old Series) 8913, Federal Reserve Bank of Cleveland.
    14. Townsend, Robert M., 1979. "Optimal contracts and competitive markets with costly state verification," Journal of Economic Theory, Elsevier, vol. 21(2), pages 265-293, October.
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    Cited by:

    1. Thomas, Hugh, 1999. "A preliminary look at gains from asset securitization," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 9(3), pages 321-333, August.
    2. Christopher P. Beshouri & Peter J. Nigro, 1995. "Securitization of Small Business Loans," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 4(1), pages 1-29, Spring.

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