Why Do Depository Institutions Use Securitisation
Journal of Banking Regulation, Vol. 10, No. 2, 2009
31 Pages Posted: 8 Sep 2006 Last revised: 24 Feb 2011
Date Written: June 1, 2005
The objective of this paper is to explore the economic incentives behind the securitisation decision. This paper examines two competing hypotheses, the "comparative advantage hypothesis" and the "financing hypothesis". A UK data set is used, thereby avoiding some of the problems arising from US data, such as usually leaving out of the empirical tests the securitisation of mortgages and personal loans. The results support the financing hypothesis that is; the use of securitisation by British depository institutions is due to financing needs rather than to a loss of their comparative advantage in performing the intermediary role.
Keywords: securitisation, depository institutions
JEL Classification: G2, G21
Suggested Citation: Suggested Citation