Securitization and Lending Competition

Frankel, David M.; Yu, Jin

doi:10.1093/restud/rdv013

Cited by 13 publications

(25 citation statements)

References 54 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…Therefore, they tend to focus on observables (hard information) when granting credit as this type of information is easier to come by. However, in their theoretical model on securitization and lending competition, Frankel and Jin (2015) argue that despite the relative informational disadvantage of foreign banks, securitization enhances competition for borrowers with strong observables (favourable hard information -e.g. credit score, loan-to-value ratio).…”

Section: Empirical Modelmentioning

confidence: 99%

Trustee reputation in securitization: When does it matter?

2019

View full text Add to dashboard Cite

We consider the role of trustees–who are nominated to protect the interests of investors–in securitization pricing and whether investors rely on them to mitigate risks. In particular, we examine the effect of trustee reputation on initial yield spreads of European mortgage‐backed security (MBS) issuances between 1999 and the first half of 2007. We find that engaging reputable trustees led to lower spreads during the credit boom period prior to the 2007–2009 financial crisis. Our findings suggest that trustees’ reputation was considered by investors to be more important when risk assessment became more challenging.

show abstract

Section: Empirical Modelmentioning

confidence: 99%

Trustee reputation in securitization: When does it matter?

2019

View full text Add to dashboard Cite

show abstract

“…Second, securitization may help banks to recycle funds in order to invest in more profitable projects (Gordon and Pennacchi 1995; Parlour and Plantin 2008). Third, securitization may help banks to circumnavigate Bertrand competition in lending rate (Ahn 2010; Ahn and Breton 2014), or somewhat opposite, securitization may stimulate competition between local and remote banks (Frankel and Jin 2015).…”

Section: Introductionmentioning

confidence: 99%

Lending Competition and Loan Sales: A Macroeconomic Analysis Under Directed Search

Huang

Sun

2020

Economic Inquiry

View full text Add to dashboard Cite

We present a macroeconomic analysis of loan sales driven by bank competition in lending and entrepreneur directed search for funding opportunities. We show how these two features of our macrofinance model can interact to reduce interest rates on loans financed via on‐balance‐sheet activities, and how this can motivate loan sales as a strategy of financing via off‐balance‐sheet activities. The results shed some light on the shift over the years preceding the global financial crisis in the practice of U.S. and European banks, from the traditional “originate‐to‐hold” model of credit provision, toward the “originate‐to‐distribute” approach for credit extension. (JEL E44, G21, G24).

show abstract

“…Von Thadden, 2004, Hauswald and Marquez, 2006, Frankel and Jin, 2015. Several empirical papers provide evidence that physical proximity facilitates information collection, lowers transaction and monitoring costs, and improves loan performance (Petersen and Rajan, 2002, Berger et al, 2005, Degryse and Ongena, 2005, DeYoung, Glennon and Nigro, 2008, Agarwal and Hauswald, 2010, DeYoung et al, 2011, Loutskina and Strahan, 2011, Granja, Leuz and Rajan, 2018.…”

mentioning

confidence: 99%

Distant Lending, Specialization, and Access to Credit

Pattison

2020

View full text Add to dashboard Cite

Small business lending has historically been very local, but distances between small businesses and their lenders have steadily increased over the last forty years. This paper investigates a new lending strategy made possible by distant small business lending: industry specialization. Using data on all Small Business Administration 7(a) loans from 2001-2017, we document a substantial increase in remote, specialized small business lenders, i.e., lenders that originate many distant loans and concentrate these loans within a small number of industries. These lenders target low-risk industries and, consistent with expertise, experience better loan performance within these industries. We then examine whether this industry-specialized lending serves as a substitute or complement to traditional, geographically specialized lending. We exploit the staggered entry of a remote, specialized lender to estimate the impact of specialized lending on credit access. Entry significantly increases total lending, with no evidence of substitution away from other lenders. The results indicate that specialized lending can deepen credit markets by providing new loans to low-risk but underfinanced small businesses.

show abstract

Securitization and Lending Competition

Cited by 13 publications

References 54 publications

Trustee reputation in securitization: When does it matter?

Trustee reputation in securitization: When does it matter?

Lending Competition and Loan Sales: A Macroeconomic Analysis Under Directed Search

Distant Lending, Specialization, and Access to Credit

Contact Info

Product

Resources

About