The Impact of Securitization on Banks’ Mortgage Loan Growth

This study investigates how asset securitization affects U.S. bank holding companies’ mortgage lending behavior during pre- and post-financial crisis periods. Using Home Mortgage Disclosure Act (HMDA) data and FR Y9-C data from 2005 to 2017, we find a positive effect of asset securitization on U.S. holding companies’ approved mortgage loan growth during pre-crisis period but such positive effect decreases dramatically after the crisis. Our results suggest that asset securitization do help increase banks’ credit supply before the crisis while after the crisis, banks, even those relatively active in asset securitization and sales market, became more cautious with their lending.