Securitization and lending standards: Evidence from the European wholesale loan market

Alper Kara, David Marques-Ibanez and Steven Ongena

No 1141, International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)

Abstract: We assess the effect of securitization activity on banks' lending rates employing a uniquely detailed dataset from the euro-denominated syndicated loan market. We find that, in the run up to the 2007-2009 crisis banks that were more active at originating asset-backed securities did not price their loans more aggressively (i.e. with narrower lending spreads) than less-active banks. Using a unique feature of our dataset, we show that also within the set of loans that were previously securitized, the relative level of securitization activity by the originating bank is not related to narrower lending spreads. Our results suggest that while the credit cycle seems to have a major impact of lending standards, the effect of securitization activity appears to be very limited.

Keywords: Securitization; bank lending rates; syndicated loans (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2015-08-06
New Economics Papers: this item is included in nep-ban
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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http://www.federalreserve.gov/econresdata/ifdp/2015/files/ifdp1141.pdf Full text (application/pdf)
http://dx.doi.org/10.17016/IFDP.2015.1141 http://dx.doi.org/10.17016/IFDP.2015.1141 (application/pdf)

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Journal Article: Securitization and lending standards: Evidence from the European wholesale loan market (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgif:1141

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