Lending Relationships and Credit Rationing: The Impact of Securitization

European Banking Center Discussion Paper No. 2011-034

CentER Discussion Paper Series No. 2011-128

34 Pages Posted: 30 Nov 2011

See all articles by Hans Degryse

Hans Degryse

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

Santiago Carbo

University of Granada - Faculty of Economics and Business Administration

Francisco Rodriguez Fernandez

University of Granada

Date Written: November 30, 2011

Abstract

Do lending relationships mitigate credit rationing? Does securitization influence the impact of lending relationships on credit rationing? If so, is its impact 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 that is 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 mortgage-backed securities (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

Degryse, Hans and Carbo, Santiago and Fernandez, Francisco Rodriguez, Lending Relationships and Credit Rationing: The Impact of Securitization (November 30, 2011). European Banking Center Discussion Paper No. 2011-034. Available at SSRN: https://ssrn.com/abstract=1966471 or http://dx.doi.org/10.2139/ssrn.1966471

Hans Degryse (Contact Author)

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

Naamsestraat 69
Leuven, B-3000
Belgium

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Santiago Carbo

University of Granada - Faculty of Economics and Business Administration ( email )

Granada, E-18071
Spain

Francisco Rodriguez Fernandez

University of Granada

C/Rector López Argueta S/N
Granada, Granada 18071
Spain

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