Deposit competition and the securitisation boom / Danny McGowan, Huyen Nguyen
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Discovery
1757555404
URN
urn:nbn:de:gbv:3:2-136559
DOI
ISBN
ISSN
Autorin / Autor
Beiträger
Körperschaft
Erschienen
Halle (Saale), Germany : Halle Institute for Economic Research (IWH) - Member of the Leibniz Association, 04. Mai 2021
Umfang
1 Online-Ressource (III, 48 Seiten, 2,44 MB) : Diagramm, Karte
Ausgabevermerk
Sprache
eng
Anmerkungen
Inhaltliche Zusammenfassung
We provide novel evidence that regulatory-induced deposit market competition provoked banks to enter the securitisation market. Exploiting the state-specific removal of interstate bank branching restrictions across U.S states between 1994 and 2006 as an exogenous source of deposit competition, we document four key results. First, the interstate branching deregulation leads to an intensification of deposit market competition. Second, this rise in the cost of deposits increases the probability that a bank operates an ‘originate-to-distribute’ model by 6%. Third, the securitisation effect holds across bank asset classes but is most pronounced for mortgages. Finally, the results are strongest among small and single state banks owing to their reliance on deposit funding. The evidence is consistent with theories where increasing the cost of deposits creates incentives for banks to use securitisation as a cheaper loan funding model. The findings highlight a hitherto neglected supply-side explanation for the rapid expansion in securitisation before the financial crisis and speak to the debate about banking competition policy.
Schriftenreihe
IWH-Diskussionspapiere ; 2021, no. 6 (May 2021) ppn:837399270