Real Effects of Securitization

45 Pages Posted: 1 Dec 2015

See all articles by Tobias Berg

Tobias Berg

Frankfurt School of Finance & Management

Daniel Streitz

Copenhagen Business School

Michael Wedow

European Central Bank (ECB) - Directorate Financial Stability and Supervision

Date Written: June 2015

Abstract

We assess the impact of securitization on corporate credit supply and real effects such as investment, sales, and employment. Exploiting the staggered entry of banks in the CLO markets, we document that firms are able to borrow larger amounts after their bank becomes securitization active. The increased use of debt financing increases investment in cash acquisitions as well as firms’ asset, sales, and employment growth. Consistent with a causal effect of securitization, all effects are concentrated in the set of BB/B-rated firms, i.e., firms whose loans are purchased by CLO vehicles. Overall, our results suggest that increased loan supply through securitization can affect real firm outcomes.

Keywords: Securitization, Credit Supply, Real Effects, Collateralized loan obligations (CLOs), Institutional Investors, Syndicated loans

JEL Classification: G21, G23,G31!G32

Suggested Citation

Berg, Tobias and Streitz, Daniel and Wedow, Michael, Real Effects of Securitization (June 2015). BAFFI CAREFIN Centre Research Paper No. 2015-14. Available at SSRN: https://ssrn.com/abstract=2696906 or http://dx.doi.org/10.2139/ssrn.2696906

Tobias Berg (Contact Author)

Frankfurt School of Finance & Management ( email )

Sonnemannstraße 9-11
Frankfurt am Main, 60314
Germany

Daniel Streitz

Copenhagen Business School ( email )

Solbjerg Plads 3
Frederiksberg C, DK - 2000
Denmark

Michael Wedow

European Central Bank (ECB) - Directorate Financial Stability and Supervision ( email )

Frankfurt a.M.
Germany

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