Local versus aggregate lending channels: the effects of securitization on corporate credit supply

Gabriel Jimenez, Atif Mian, Jose-Luis Peydro and Jesús Saurina

No 1124, Working Papers from Banco de España

Abstract: While banks may change their credit supply due to bank balance-sheet shocks (the local lending channel), firms can react by adjusting their sources of financing in equilibrium (the aggregate lending channel). We provide a methodology to identify the aggregate (firm-level) effects of the lending channel and estimate the impact of banks’ ability to securitize realestate assets on credit supply for non real-estate firms in Spain over 2000-2010. We show that firm-level equilibrium dynamics nullify the strong local (bank-level) lending channel of securitization on credit quantity for firms with multiple banking relationships. Credit terms however become softer, but there are no real effects. Securitization implies a credit expansion on the extensive margin towards first-time bank clients, which are more likely to default. Finally, the 2008 securitization collapse reverses the local lending channel.

Keywords: Bank lending channel; credit supply; credit demand; macroprudential; real economy effects of finance; securitization (search for similar items in EconPapers)
JEL-codes: E44 E50 G01 G21 G28 G30 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2011-10
New Economics Papers: this item is included in nep-ban, nep-cfn and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:1124

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