Dis-integrating credit markets: diversification, securitization, and lending in a recovery

Matthieu Chavaz

No 617, Bank of England working papers from Bank of England

Abstract: Using exogenous variation in exposure to hurricanes, this article explores how differently diversified US banks lend during the protracted recovery from a major downturn. Compared to diversified banks, local banks (i) originate a higher share of new mortgage and small business loans in affected areas, but (ii) sell a higher share of the new mortgages into the secondary market. These results suggest a pattern of specialization, whereby loans in affected areas are increasingly originated by banks with special abilities or incentives to seize opportunities in a distressed market, but increasingly transferred to agents which can better support the associated risk.

Keywords: Bank lending; recovery; diversification; securitization; mortgage lending; Home Mortgage Disclosure Act (HMDA). (search for similar items in EconPapers)
JEL-codes: G18 G21 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2016-09-23
New Economics Papers: this item is included in nep-ban and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

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Persistent link: https://EconPapers.repec.org/RePEc:boe:boeewp:0617

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