On the Differential Impact of Securitization on Bank Lending During the Financial Crisis

37 Pages Posted: 2 Mar 2016

See all articles by Clemens Bonner

Clemens Bonner

De Nederlandsche Bank; Tilburg University

Daniel Streitz

Copenhagen Business School

Michael Wedow

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

Date Written: March 1, 2016

Abstract

This paper analyzes the effect of securitization on bank loan supply over the 2001 to 2013 period using a large sample of Eurozone banks. We document that an increase in banks’ ABS issuances positively correlates with bank loan supply before the 2007-08 financial crisis but not afterwards. The underlying collateral of the securitization is correlated with changes of loan supply of the respective type. The main motivation for banks to issue ABS and covered bonds is their use as a funding tool. Since the required skills are similar, ABS issuers were better able to switch to covered bonds, allowing them to gain from the higher liquidity of covered bonds during and right after the financial crisis. We do not find evidence of ABS issuances increasing bank risk.

Keywords: Securitization, Credit Supply, Financial Crisis

JEL Classification: G21

Suggested Citation

Bonner, Clemens and Streitz, Daniel and Wedow, Michael, On the Differential Impact of Securitization on Bank Lending During the Financial Crisis (March 1, 2016). De Nederlandsche Bank Working Paper No. 501. Available at SSRN: https://ssrn.com/abstract=2740418 or http://dx.doi.org/10.2139/ssrn.2740418

Clemens Bonner (Contact Author)

De Nederlandsche Bank ( email )

PO Box 98
1000 AB Amsterdam
Amsterdam, 1000 AB
Netherlands

Tilburg University ( email )

P.O. Box 90153
Tilburg, DC 5000 LE
Netherlands

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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