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Securitization and the bank lending channel

  • Yener Altunbas
  • Leonardo Gambacorta
  • David Marques

The dramatic increase in securitisation activity experienced in Europe in the years following the introduction of the euro has altered the liquidity, credit and maturity transformation role traditionally performed by banks. We claim that the changing role of credit intermediaries due to securitisation has also modified the effectiveness of the bank lending channel and banks' ability to grant loans. We use a novel database of securitisation activity and a large sample of European banks and find that the use of securitisation shelters banks' loan supply from the effects of monetary policy. Securitisation activity has also strengthened banks' capacity to supply new loans. This capacity, however, depends on business cycle conditions and, notably, on banks' risks positions. The recent credit crisis is instructive in this respect.

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Paper provided by Federal Reserve Bank of Chicago in its series Proceedings with number 1101.

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Length: 421-443
Date of creation: 2008
Date of revision:
Publication status: Published in Conference on Bank Structure and Competition (2008: 44th) ; Credit Market Turmoil: Causes, Consequences, and Causes
Handle: RePEc:fip:fedhpr:1101
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