Local Versus Aggregate Lending Channels: The Effects Of Securitization On Corporate Credit Supply In Spain

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

No 16595, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: While banks may change their supply of credit 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 formalize a methodology for separately estimating these effects. We estimate the local and aggregate lending channel effects of the banks' ability to securitize real estate assets on non-real estate firms in Spain. We show that equilibrium dynamics nullify the strong local lending channel effect on credit quantity for firms with multiple banking relationships. However, credit terms for these firms become significantly more favorable due to securitization. Securitization also leads to an expansion in credit on the extensive margin towards first-time bank clients, and these borrowers are significantly more likely to end up in default. Finally, the 2008 collapse in securitization leads to a reversal in local lending channel.

JEL-codes: E44 G01 G21 (search for similar items in EconPapers)
Date: 2010-12
New Economics Papers: this item is included in nep-ban, nep-bec and nep-mac
Note: CF ME
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Citations: View citations in EconPapers (8)

Published as Gabriel Jimenez & Atif Mian & Jose-Luis Peydro & Jesus Saurina, 2011. "Local versus aggregate lending channels : the effects of securitization on corporate credit supply in Spain," Proceedings, Federal Reserve Bank of Chicago, issue May, pages 210-220.

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Working Paper: Local versus aggregate lending channels: the effects of securitization on corporate credit supply in Spain (2011)
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