Securitization and Bank Efficiency
Empirical Research in Banking and Corporate Finance
ISBN: 978-1-78973-398-3, eISBN: 978-1-78973-397-6
Publication date: 12 September 2022
We examine whether loan securitization has an impact on bank efficiency. Using a sample of large US commercial banks from 2002 to 2012, we find that bank loan securitization has a significant and positive impact on bank efficiency, and this relationship is stronger for banks with higher capital ratios, higher default risk, and lower level of liquidity and diversification. Our results are robust to Heckman self-selection correction and difference-in-difference (DID) analysis. In addition, these results are found mainly in non-mortgage loan securitizations but not in mortgage loan securitizations. Finally, we show that loan sales also have a positive impact on bank efficiency.
We would like to thank two anonymous referees and the Editors for many useful comments. We would also like to thank Thomas Chemmanur, Iftekhar Hasan, Shan He, Kose John, Debarshy Nanda, and Anthony Saunders for helpful commends and discussions.
Chen, Z., Liu, F.H., Peng, J., Zhang, H. and Zhou, M. (2022), "Securitization and Bank Efficiency", Ferris, S.P., John, K. and Makhija, A.K. (Ed.) Empirical Research in Banking and Corporate Finance (Advances in Financial Economics, Vol. 21), Emerald Publishing Limited, Bingley, pp. 191-222. https://doi.org/10.1108/S1569-373220220000021007
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