Deregulation and the Securitization Boom

50 Pages Posted: 14 Jun 2019

See all articles by Danny McGowan

Danny McGowan

University of Birmingham

Huyen Nguyen

University of Nottingham

Date Written: June 2019


We provide novel evidence that bank branching deregulation increased securitization in the lead up to the financial crisis. The exogenous state-specific removal of interstate branching restrictions increases the probability that 1) a bank operates an "originate to distribute" model by 7%, and 2) a loan is securitized by 5.6%. These effects are more pronounced among large banks. We find that the increase in securitization stems from deregulation increasing the cost of deposits as the equilibrium number of bank branches rises across markets. The findings highlight a hitherto neglected factor behind the rapid expansion in securitization before the financial crisis.

Keywords: OTD, securitization, branching deregulation, deposit competition

JEL Classification: G21, G28, K11

Suggested Citation

McGowan, Danny and Nguyen, Huyen, Deregulation and the Securitization Boom (June 2019). Available at SSRN: or

Danny McGowan (Contact Author)

University of Birmingham ( email )

Edgbaston, Birmingham B15 2TT
United Kingdom

Huyen Nguyen

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

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