Lending Relationships and Credit Rationing: The Impact of Securitization

30 Pages Posted: 16 Aug 2011

See all articles by Santiago Carbo-Valverde

Santiago Carbo-Valverde

Bangor Business School; Universidad Complutense de Madrid (UCM) - Colegio Universitario de Estudios Financieros (CUNEF)

Hans Degryse

KU Leuven, Department Accounting, Finance and Insurance; Centre for Economic Policy Research (CEPR)

Francisco Rodriguez-Fernandez

University of Granada - Department of Economic Theory and History

Multiple version iconThere are 4 versions of this paper

Date Written: August 16, 2011

Abstract

Do lending relationships mitigate credit rationing? Does securitization influence the impact of lending relationships on credit rationing differently in normal periods versus crisis periods? This paper combines several unique data sets to address these questions. Employing a disequilibrium model to identify credit rationing, we find that more intense lending relationships, measured through their length and lower number, considerable improve credit supply and reduce the degree of credit rationing. In general, we find that a relationship with a bank being more involved in securitization activities relaxes credit constraints in normal periods; however, it also increases credit rationing during crisis periods. Finally, we study the impact of different types of securitization – covered bonds and MBS – on credit rationing. While both types of securitization reduce credit rationing in normal periods, the issuance of MBS by a firm’s main bank aggravates these firm’s credit rationing in crisis periods.

Keywords: lending relationships, financial crisis, securitization

JEL Classification: G21

Suggested Citation

Carbo-Valverde, Santiago and Degryse, Hans and Rodriguez-Fernandez, Francisco, Lending Relationships and Credit Rationing: The Impact of Securitization (August 16, 2011). 24th Australasian Finance and Banking Conference 2011 Paper. Available at SSRN: https://ssrn.com/abstract=1910534 or http://dx.doi.org/10.2139/ssrn.1910534

Santiago Carbo-Valverde

Bangor Business School ( email )

Bangor Business School
College Road
Gwynedd LL57 2DG, Wales LL57 2DG
United Kingdom

Universidad Complutense de Madrid (UCM) - Colegio Universitario de Estudios Financieros (CUNEF) ( email )

Serrano Anguita 9
Madrid, Madrid 28004
Spain

Hans Degryse

KU Leuven, Department Accounting, Finance and Insurance ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Francisco Rodriguez-Fernandez (Contact Author)

University of Granada - Department of Economic Theory and History ( email )

Granada
Spain

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