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

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journal contribution
posted on 26.07.2016 by Alper Kara, David Marques-Ibanez, Steven Ongena
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 more active at originating asset-backed securities did not price their loans more aggressively (i.e. with narrower lending spreads) than non-active banks. 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 findings, which are limited to the cross-sectional impact of securitization, suggest that the effect of securitization on the cost of corporate funding appears to be quite limited.

History

School

  • Business and Economics

Department

  • Business

Published in

Journal of Financial Stability

Citation

KARA, A., MARQUES-IBANEZ, D. and ONGENA, S., 2017. Securitization and lending standards: Evidence from the European wholesale loan market. Journal of Financial Stability, 26, pp. 107-127.

Publisher

© Elsevier

Version

AM (Accepted Manuscript)

Publisher statement

This work is made available according to the conditions of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) licence. Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/

Acceptance date

12/07/2016

Publication date

2017

Notes

This paper was accepted for publication in the journal Journal of Financial Stability and the definitive published version is available at http://dx.doi.org/10.1016/j.jfs.2016.07.004

ISSN

1572-3089

Language

en

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