Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/297696 
Year of Publication: 
2024
Series/Report no.: 
IWH Discussion Papers No. 6/2021
Version Description: 
This version: 10.06.2024
Publisher: 
Halle Institute for Economic Research (IWH), Halle (Saale)
Abstract: 
We study how deposit competition affects a bank's decision to securitize mortgages. Exploiting the state-specific removal of deposit market caps across the US as a source of competition, we find a 7.1 percentage point increase in the probability that banks securitize mortgage loans. This result is driven by an 11 basis point increase in deposit costs and corresponding reductions in banks' deposit holdings. Our results are strongest among banks that rely more on deposit funding. These findings highlight a hitherto undocumented and unintended regulatory cause that motivates banks to adopt the originate-to-distribute model.
Subjects: 
competition
deposits
originate-to-distribute
securitization
JEL: 
G21
G28
K21
Document Type: 
Working Paper

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