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On the differential impact of securitization on bank lending during the financial crisis

Author

Listed:
  • Clemens Bonner
  • Daniel Streitz
  • Michael Wedow

Abstract

This paper analyzes the effect of securitization on bank loan supply over the 2001 to 2013 period using a large sample of Eurozone banks. We document that an increase in banks' ABS issuances positively correlates with bank loan supply before the 2007-08 financial crisis but not afterwards. The underlying collateral of the securitization is correlated with changes of loan supply of the respective type. The main motivation for banks to issue ABS and covered bonds is their use as a funding tool. Since the required skills are similar, ABS issuers were better able to switch to covered bonds, allowing them to gain from the higher liquidity of covered bonds during and right after the financial crisis. We do not find evidence of ABS issuances increasing bank risk.

Suggested Citation

  • Clemens Bonner & Daniel Streitz & Michael Wedow, 2016. "On the differential impact of securitization on bank lending during the financial crisis," DNB Working Papers 501, Netherlands Central Bank, Research Department.
  • Handle: RePEc:dnb:dnbwpp:501
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    File URL: https://www.dnb.nl/en/binaries/Working%20paper%20501_tcm47-338349.pdf
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    References listed on IDEAS

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    Cited by:

    1. Andrew Linn & Ronan C Lyons, 2018. "The Triple Trigger? Negative Equity, Income Shocks and Institutions as Determinants of Mortgage Default," Trinity Economics Papers tep0718, Trinity College Dublin, Department of Economics.
    2. repec:mgs:ijmsba:v:5:y:2019:i:4:p:13-17 is not listed on IDEAS

    More about this item

    Keywords

    Securitization; Credit Supply; Financial Crisis;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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