Local Versus Aggregate Lending Channels: The Effects of Securitization on Corporate Credit Supply

57 Pages Posted: 6 Oct 2011

See all articles by Gabriel Jiménez

Gabriel Jiménez

Banco de España

Mian Muhammad Atif

affiliation not provided to SSRN

José-Luis Peydró

Imperial College London; Centre for Economic Policy Research (CEPR); Universitat Pompeu Fabra - Faculty of Economic and Business Sciences

Jesus Saurina Salas

Banco de España

Date Written: October 6, 2011

Abstract

While banks may change their credit supply due to bank balance-sheet shocks (the local lending channel), firms can react by adjusting their sources of financing in equilibrium (the aggregate lending channel). We provide a methodology to identify the aggregate (firm-level) effects of the lending channel and estimate the impact of banks’ ability to securitize real estate assets on credit supply for non real-estate firms in Spain over 2000-2010. We show that firm-level equilibrium dynamics nullify the strong local (bank-level) lending channel of securitization on credit quantity for firms with multiple banking relationships. Credit terms however become softer, but there are no real effects. Securitization implies a credit expansion on the extensive margin towards first-time bank clients, which are more likely to default. Finally, the 2008 securitization collapse reverses the local lending channel.

Keywords: bank lending channel, credit supply, credit demand, macroprudential, real economy effects of finance, securitization

JEL Classification: G21, G28, G01, G30, E44, E50

Suggested Citation

Jimenez, Gabriel and Atif, Mian Muhammad and Peydro, Jose-Luis and Saurina Salas, Jesus, Local Versus Aggregate Lending Channels: The Effects of Securitization on Corporate Credit Supply (October 6, 2011). Banco de Espana Working Paper No. 1124, Available at SSRN: https://ssrn.com/abstract=1939774 or http://dx.doi.org/10.2139/ssrn.1939774

Gabriel Jimenez (Contact Author)

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Mian Muhammad Atif

affiliation not provided to SSRN ( email )

Jose-Luis Peydro

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, Barcelona 08005
Spain
(+34) 93 542 1756 (Phone)
(+34) 93 542 1746 (Fax)

HOME PAGE: http://https://sites.google.com/site/joseluispeydroswebpage/

Jesus Saurina Salas

Banco de España ( email )

Madrid 28014
Spain

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