Does Securitization affect Bank Lending? Evidence from Bank Responses to Funding Shocks

Content Provider	Semantic Scholar
Author	Loutskina, Elena
Copyright Year	2005
Abstract	This paper studies the effect of securitization on bank lending. I propose a new index of “securitizability of a bank portfolio” that can be thought of as a weighted average of the potential to securitize loans of a given type, where the weights reflect the composition of a bank loan portfolio. I use this new index to show that securitization makes bank lending less sensitive to cost of fund shocks because it provides banks with an additional source of funding. Securitization thus weakens the link from monetary policy to bank lending activity. Furthermore, by allowing banks to convert illiquid loans into liquid funds, securitization reduces banks’ holdings of liquid securities and increases their loan portfolios.
File Format	PDF HTM / HTML
Alternate Webpage(s)	https://gates.comm.virginia.edu/uvafinanceseminar/2006-LoutskinaPaper.pdf
Language	English
Access Restriction	Open
Content Type	Text
Resource Type	Article