Securitization and Lending Competition
نویسنده
چکیده
We study the e¤ects of securitization on interbank lending competition when banks see private signals of local applicants repayment chances. If banks cannot securitize, the outcome is e¢ cient: they lend to their most creditworthy local applicants. With securitization, banks lend also to remote applicants with strong observables in order to lessen the lemons problem they face in selling their securities. This reliance on observables is ine¢ cient, raises the mean default risk, and may lead to a deceptive rise in credit scores.
منابع مشابه
The Efficacy of Small Option for Small and Medium Enterprise
An upgrade of the lending sector of Ghana requires modern and improved met of banking. Securitization is one of the modern processes used to leverage on lending in many banking sectors. The aim of the study was to assess the readiness and preparedness of the banking industry of Ghana towards the adoption of securitization. The study involved a survey and a quantitative research design in which ...
متن کاملShocks to Bank Lending , Risk - Taking , Securitization , and their Role for U . S . Business Cycle Fluctuations
Shocks to bank lending, risk-taking and securitization activities that are orthogonal to real economy and monetary policy innovations account for more than 30 percent of U.S. output variation. The dynamic effects, however, depend on the type of shock. Expansionary securitization shocks lead to a permanent rise in real GDP and a fall in inflation. Bank lending and risk-taking shocks, in contrast...
متن کاملOptimal Securitization of Credit Portfolios via Impulse Control
We study the optimal loan securitization policy of a commercial bank which is mainly engaged in lending activities. For this we propose a stylized dynamic model which contains the main features affecting the securitization decision. In line with reality we assume that there are non-negligible fixed and variable transaction costs associated with each securitization. The fixed transaction costs l...
متن کاملMisaligned Incentives and Mortgage Lending in Asia
This paper provides a conceptual basis for the price discovery potential for tradable market instruments and specifically the development of mortgage securitization in Asia and the potential dangers of such markets. Nonetheless we argue for the potential importance of securitization in Asia because of its possible role in increasing transparency of the financial sector of Asian economies. We pu...
متن کاملOn Securitization of International Syndicated Loans
Since 80s, along with the heating-up competition in finance industry and the liberalization trend of financial supervision, a tendency of integration appears in world three financial service fields, namely banking, insurance, and security. It threats the banking business. The banking industry that always possesses the core position in financial system faces enormous challenges. On the other han...
متن کامل