The role of securitization in bank financial management

Elena Loutskina

No 1025, Proceedings from Federal Reserve Bank of Chicago

Abstract: This paper studies the effect of securitization on bank lending. I propose a new index of ?securitizability of a bank portfolio? that can be thought of as a weighted average of the potential to securitize loans of a given type, where the weights reflect the composition of a bank loan portfolio. I use this new index to show that securitization makes bank lending less sensitive to cost of fund shocks because it provides banks with an additional source of funding. Securitization thus weakens the link from monetary policy to bank lending activity. Furthermore, by allowing banks to convert illiquid loans into liquid funds, securitization reduces banks? holdings of liquid securities and increases their loan portfolios.

Keywords: Asset-backed financing; Bank liquidity (search for similar items in EconPapers)
Pages: 204-222
Date: 2006
References: Add references at CitEc
Citations:

Published in Conference on Bank Structure and Competition (2006: 42nd) ; Innovations in real estate markets : risk, rewards, and the role of regulation

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedhpr:1025

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Proceedings from Federal Reserve Bank of Chicago Contact information at EDIRC.
Bibliographic data for series maintained by Lauren Wiese ().