KARA, A., MARQUES-IBANEZ, D. and ONGENA, S., 2017. Securitization and lending standards: Evidence from the European wholesale loan market. Journal of Financial Stability, 26, pp. 107-127.
We assess the effect of securitization activity on banks’ lending rates employing a uniquely detailed dataset from the euro-denominated syndicated loan market. We find that in the run-up to the 2007-2009 crisis banks more active at originating asset-backed securities did not price their loans more aggressively (i.e. with narrower lending spreads) than non-active banks. We show that also within the set of loans that were previously securitized, the relative level of securitization activity by the originating bank is not related to narrower lending spreads. Our findings, which are limited to the cross-sectional impact of securitization, suggest that the effect of securitization on the cost of corporate funding appears to be quite limited.
This paper was accepted for publication in the journal Journal of Financial Stability and the definitive published version is available at http://dx.doi.org/10.1016/j.jfs.2016.07.004