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On the differential impact of securitization on bank lending during the financial crisis

Clemens Bonner (), Daniel Streitz and Michael Wedow ()

DNB Working Papers from Netherlands Central Bank, Research Department

Abstract: This paper analyzes the effect of securitization on bank loan supply over the 2001 to 2013 period using a large sample of Eurozone banks. We document that an increase in banks' ABS issuances positively correlates with bank loan supply before the 2007-08 financial crisis but not afterwards. The underlying collateral of the securitization is correlated with changes of loan supply of the respective type. The main motivation for banks to issue ABS and covered bonds is their use as a funding tool. Since the required skills are similar, ABS issuers were better able to switch to covered bonds, allowing them to gain from the higher liquidity of covered bonds during and right after the financial crisis. We do not find evidence of ABS issuances increasing bank risk.

Keywords: Securitization; Credit Supply; Financial Crisis (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-eec and nep-fmk
Date: 2016-02
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