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Investment bank reputation and issuance fees: evidence from asset-backed securities

Author

Listed:
  • Nodirbek Karimov

    (University of Huddersfield)

  • Alper Kara

    (Brunel University London)

  • Gareth Downing

    (Manchester Metropolitan University)

Abstract

We examine the relationship between investment bank (IB) reputation and fees paid in ABS issuance. We compile an extensive instrument level dataset of over 35,000 ABS issued between 1997 and 2018 in the US and the European market. We find that reputation of IBs is influential in determining the compensation they are paid for their services in ABS issuance. On average, reputable IBs receive 3.74% higher fees in comparison to others. Moreover, our results show IBs’ ability to obtain lower initial yield spreads in ABS issuance. Overall, our findings provide evidence to the arguments that reputable IBs with high market presence offer high-quality services and assurance to the market participants (i.e., certification effect) leading to better deals. In return, they are able to charge higher fees.

Suggested Citation

  • Nodirbek Karimov & Alper Kara & Gareth Downing, 2025. "Investment bank reputation and issuance fees: evidence from asset-backed securities," Review of Quantitative Finance and Accounting, Springer, vol. 65(2), pages 599-618, August.
    • Handle: RePEc:kap:rqfnac:v:65:y:2025:i:2:d:10.1007_s11156-024-01354-5
    DOI: 10.1007/s11156-024-01354-5
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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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