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Disentangling the impact of securitization on bank profitability

Disentangling the impact of securitization on bank profitability
Disentangling the impact of securitization on bank profitability
We empirically evaluate the channels through which securitization impacts bank
profitability. To this end, we analyze the role played by bank risk, cost of funding, liquidity and regulatory capital in explaining the relationship between securitization and bank profitability. We find that securitization activities tend to boost profitability. We also show that bank risk, cost of funding, liquidity and regulatory capital individually and jointly act as transmission channels in the securitization-profitability relationship. In addition, we break down the securitization effects on bank profitability into direct and indirect effects and
identify the contribution of each individual transmission channel in the overall impact on bank profitability. Our findings have several implications for banks, financial markets, and regulators.
0275-5319
Bakoush, Mohamed
661c4408-3dde-4b6e-9964-6dd7175e5813
Aboarab, Rabab
5afa072a-190b-48b7-89a9-91b56adf7ab3
Wolfe, Simon
9a2367fc-36cc-496a-bbd2-e7346bcbb19e
Bakoush, Mohamed
661c4408-3dde-4b6e-9964-6dd7175e5813
Aboarab, Rabab
5afa072a-190b-48b7-89a9-91b56adf7ab3
Wolfe, Simon
9a2367fc-36cc-496a-bbd2-e7346bcbb19e

Bakoush, Mohamed, Aboarab, Rabab and Wolfe, Simon (2018) Disentangling the impact of securitization on bank profitability. Research in International Business and Finance. (doi:10.1016/j.ribaf.2018.09.013).

Record type: Article

Abstract

We empirically evaluate the channels through which securitization impacts bank
profitability. To this end, we analyze the role played by bank risk, cost of funding, liquidity and regulatory capital in explaining the relationship between securitization and bank profitability. We find that securitization activities tend to boost profitability. We also show that bank risk, cost of funding, liquidity and regulatory capital individually and jointly act as transmission channels in the securitization-profitability relationship. In addition, we break down the securitization effects on bank profitability into direct and indirect effects and
identify the contribution of each individual transmission channel in the overall impact on bank profitability. Our findings have several implications for banks, financial markets, and regulators.

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Disentangling the Impact of Securitization on Bank Profitability - Accepted Manuscript
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More information

Accepted/In Press date: 23 September 2018
e-pub ahead of print date: 30 September 2018

Identifiers

Local EPrints ID: 423812
URI: https://eprints.soton.ac.uk/id/eprint/423812
ISSN: 0275-5319
PURE UUID: a906d92c-81b7-48d3-8e78-dffd82e843ba
ORCID for Mohamed Bakoush: ORCID iD orcid.org/0000-0001-9624-9828

Catalogue record

Date deposited: 02 Oct 2018 16:30
Last modified: 14 Mar 2019 01:29

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Contributors

Author: Mohamed Bakoush ORCID iD
Author: Rabab Aboarab
Author: Simon Wolfe

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