Securitization and Lending

Andrada Bilan, Hans Degryse, Kuchulain O’Flynn () and Steven Ongena
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Kuchulain O’Flynn: University of Zurich

Chapter Chapter 2 in Banking and Financial Markets, 2019, pp 5-30 from Palgrave Macmillan

Abstract: Abstract In this chapter, we address the impact on the loan amount that the phenomenon of loan securitization has had. Securitization implies that financial intermediaries that grant illiquid loans subsequently pool them together, diversifying risks and converting them into liquid assets or asset-backed securities (ABSs). These assets are then sold to outside investors, in exchange for wholesale funding. A liquid market for securitized assets has recognized benefits for the banking industry, such as improving risk-sharing and reducing banks’ cost of capital. But securitization can also spur risk-taking. We review the theories and estimates put forward in the recent banking literature to quantify these benefits and costs of securitization on the volume and the quality of credit.

Keywords: Banks; Lending; Securitization; Information frictions; Monetary policy; Bank regulation; Global financial crisis (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:pal:pmschp:978-3-030-26844-2_2

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DOI: 10.1007/978-3-030-26844-2_2

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