The Impacts of Securitization on US Bank Holding Companies

58 Pages Posted: 6 Mar 2008

See all articles by Wenying Jiangli

Wenying Jiangli

U.S. Federal Deposit Insurance Corporation (FDIC)

Matt Pritsker

Federal Reserve Bank of Boston

Date Written: March 1, 2008

Abstract

We use data from 2001-2007 to assess the impact of mortgage and other forms of asset securitization on the insolvency risk, profitability, and leverage ratios of US bank holding companies. Using 3 different estimation techniques, we find that banks use mortgage securitization to reduce insolvency risk and increase leverage. We also find that securitization techniques increase bank profitability. Our results suggest that securitization techniques have played a positive role. This suggests that the current turmoil in mortgage credit and securitization markets is related to recent excesses in those markets, and that securitization activity will resume after those excesses are cleared up.

Keywords: Banking, Securitization

JEL Classification: G21, G32

Suggested Citation

Jiangli, Wenying and Pritsker, Matthew G., The Impacts of Securitization on US Bank Holding Companies (March 1, 2008). Available at SSRN: https://ssrn.com/abstract=1102284 or http://dx.doi.org/10.2139/ssrn.1102284

Wenying Jiangli

U.S. Federal Deposit Insurance Corporation (FDIC) ( email )

Washington, DC 20429
United States

Matthew G. Pritsker (Contact Author)

Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
United States
617-973-3191 (Phone)

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