Real Effects of Securitization

Tobias Berg, Daniel Streitz and Michael Wedow

No 1514, BAFFI CAREFIN Working Papers from BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy

Abstract: We assess the impact of securitization on corporate credit supply and real effects such as investment, sales, and employment. Exploiting the staggered entry of banks in the CLO markets, we document that firms are able to borrow larger amounts after their bank becomes securitization active. The increased use of debt financing increases investment in cash acquisitions as well as firms’ asset, sales, and employment growth. Consistent with a causal effect of securitization, all effects are concentrated in the set of BB/B-rated firms, i.e., firms whose loans are purchased by CLO vehicles. Overall, our results suggest that increased loan supply through securitization can affect real firm outcomes.

Keywords: Securitization; Credit Supply; Real Effects; Collateralized loan obligations (CLOs); Institutional Investors; Syndicated loans (search for similar items in EconPapers)
JEL-codes: G21 G23 G31 G32 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2015
New Economics Papers: this item is included in nep-cfn
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Citations: View citations in EconPapers (9)

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