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Securitization and lending standards: Evidence from the European wholesale loan market

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  • Kara, Alper

    (Hull University Business School)

  • Marques-Ibanez, David

    () (Board of Governors of the Federal Reserve System (U.S.))

  • Ongena, Steven

    (University of Zurich)

Abstract

We assess the effect of securitization activity on banks' lending rates employing a uniquely detailed dataset from the euro-denominated syndicated loan market. We find that, in the run up to the 2007-2009 crisis banks that were more active at originating asset-backed securities did not price their loans more aggressively (i.e. with narrower lending spreads) than less-active banks. Using a unique feature of our dataset, we show that also within the set of loans that were previously securitized, the relative level of securitization activity by the originating bank is not related to narrower lending spreads. Our results suggest that while the credit cycle seems to have a major impact of lending standards, the effect of securitization activity appears to be very limited.

Suggested Citation

  • Kara, Alper & Marques-Ibanez, David & Ongena, Steven, 2015. "Securitization and lending standards: Evidence from the European wholesale loan market," International Finance Discussion Papers 1141, Board of Governors of the Federal Reserve System (U.S.).
  • Handle: RePEc:fip:fedgif:1141
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    Cited by:

    1. J-S.Mésonnier & C. O’Donnell & O. Toutain, 2017. "The Interest of Being Eligible," Working papers 636, Banque de France.
    2. Kara, Alper & Marques-Ibanez, David & Ongena, Steven, 2015. "Securitization and Credit Quality," International Finance Discussion Papers 1148, Board of Governors of the Federal Reserve System (U.S.).

    More about this item

    Keywords

    Securitization; bank lending rates; syndicated loans;

    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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