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The rise of the originate-to-distribute model and the role of banks in financial intermediation

Author

Listed:
  • Bord, Vitaly M.
  • Santos, João A. C.

Abstract

This is the second article in a series which explores the changing role of banks in the financial intermediation process. It accompanies a Liberty Street Blog series. Both discuss the complexity of the credit intermediation chain associated with securitization and note the growing participation of nonbank entities within it. These series also discuss implications for monitoring and rulemaking going forward. In this article, the authors show that, beginning in the early 1990s, lead banks increasingly used the originate-to-distribute model in their corporate lending business and that the increase was largely limited to term loans.

Suggested Citation

  • Bord, Vitaly M. & Santos, João A. C., 2012. "The rise of the originate-to-distribute model and the role of banks in financial intermediation," Economic Policy Review, Federal Reserve Bank of New York, issue Jul, pages 21-34.
  • Handle: RePEc:fip:fednep:y:2012:i:jul:p:1-14:n:v.18no.2
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    References listed on IDEAS

    as
    1. Teodora Paligorova & João A. C. Santos, 2012. "When Is It Less Costly for Risky Firms to Borrow? Evidence from the Bank Risk-Taking Channel of Monetary Policy," Staff Working Papers 12-10, Bank of Canada.
    2. Hale, Galina & Santos, João A.C., 2009. "Do banks price their informational monopoly?," Journal of Financial Economics, Elsevier, vol. 93(2), pages 185-206, August.
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    Cited by:

    1. Naifar, Nader, 2016. "Do global risk factors and macroeconomic conditions affect global Islamic index dynamics? A quantile regression approach," The Quarterly Review of Economics and Finance, Elsevier, vol. 61(C), pages 29-39.
    2. Vincenzo D’Apice & Giovanni Ferri & Punziana Lacitignola, 2016. "Rating Performance and Bank Business Models: Is There a Change with the 2007–2009 Crisis?," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 2(3), pages 385-420, November.
    3. Kim, Sooji & Plosser, Matthew & Santos, Joao A. C., 2017. "Macroprudential policy and the revolving door of risk: lessons from leveraged lending guidance," Staff Reports 815, Federal Reserve Bank of New York.
    4. Demiroglu, Cem & James, Christopher, 2015. "Bank loans and troubled debt restructurings," Journal of Financial Economics, Elsevier, vol. 118(1), pages 192-210.
    5. Tobias Adrian & Adam B. Ashcraft, 2012. "shadow banking: a review of the literature," The New Palgrave Dictionary of Economics, Palgrave Macmillan.
    6. Irani, Rustom M. & Meisenzahl, Ralf R., 2015. "Loan Sales and Bank Liquidity Risk Management: Evidence from a U.S. Credit Register," Finance and Economics Discussion Series 2015-1, Board of Governors of the Federal Reserve System (U.S.).
    7. Antonio Bianco, 2015. "Shadow banking, relationship banking, and the economics of depression," PSL Quarterly Review, Economia civile, vol. 68(275), pages 297-326.
    8. Ivanov, Ivan T. & Santos, João A.C. & Vo, Thu, 2016. "The transformation of banking: Tying loan interest rates to borrowers' CDS spreads," Journal of Corporate Finance, Elsevier, vol. 38(C), pages 150-165.
    9. Galina Hale & Tümer Kapan & Camelia Minoiu, 2016. "Crisis Transmission in the Global Banking Network," IMF Working Papers 16/91, International Monetary Fund.
    10. repec:eee:jfinec:v:127:y:2018:i:2:p:264-284 is not listed on IDEAS
    11. repec:eee:ecmode:v:68:y:2018:i:c:p:51-73 is not listed on IDEAS
    12. Greg Buchak & Gregor Matvos & Tomasz Piskorski & Amit Seru, 2017. "Fintech, Regulatory Arbitrage, and the Rise of Shadow Banks," NBER Working Papers 23288, National Bureau of Economic Research, Inc.
    13. Kevin x.d. Huang & Zhe Li & Jianfei Sun, 2018. "Bank Competition, Directed Search, and Loan Sales," Vanderbilt University Department of Economics Working Papers 18-00001, Vanderbilt University Department of Economics.
    14. repec:fip:fedgfe:2014-115 is not listed on IDEAS
    15. Tobias Adrian & Adam B. Ashcraft & Nicola Cetorelli, 2013. "Shadow bank monitoring," Staff Reports 638, Federal Reserve Bank of New York.
    16. Norvald INSTEFJORD & NAKATA Hiroyuki, 2015. "Loan Monitoring and Bank Risk," Discussion papers 15121, Research Institute of Economy, Trade and Industry (RIETI).
    17. repec:oup:revfin:v:21:y:2017:i:4:p:1739-1765. is not listed on IDEAS

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