Deposit competition and securitization

Arbeitspapier

We provide novel evidence that deposit competition incentivizes banks to securitize loans. Exploiting the state-specific removal of deposit market caps across the U.S. as an exogenous source of competition, we document a 7.1 percentage point increase in the probability that banks securitize their assets. This result is driven by an 11 basis point increase in costs of deposits and a corresponding decrease in banks' deposit growth. Our results are strongest among small and single state incumbent banks that rely more on deposit funding. These findings highlight an unintended regulatory cause that motivates banks to adopt the originate-to-distribute model.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IWH Discussion Papers ; No. 6/2021

Classification and Topics

• Classification: Wirtschaft ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Financial Institutions and Services: Government Policy and Regulation ; Property Law
• Subject: competition ; deposits ; originate-to-distribute (OTD) ; securitization

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): McGowan, Danny ; Nguyen, Huyen ; Schaeck, Klaus
• Event: Veröffentlichung
• (who): Halle Institute for Economic Research (IWH)
• (where): Halle (Saale)
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/266554
• Last update: 10.03.2025, 11:45 AM CET