Abstract
We examine the factors that influence European banks’ choice of issuing structured finance bond deals, in the form of securitization or covered bonds, vis-à-vis straight bond deals. Using a data set of 10,457 deals closed between 2000 and 2017, we find that banks may have used structured finance arrangements to manage credit risk and regulatory capital. Our results support the asymmetric information hypothesis that banks suffering from adverse selection problems choose structured finance over straight bond deals to overcome liquidity constrains and obtain longer maturity funding. Finally, we show that the choice between structured finance and straight bond finance affects not only banks’ capital ratios, but also their capital adequacy ratios.
| Original language | English |
|---|---|
| Pages (from-to) | 91-122 |
| Number of pages | 32 |
| Journal | ERBE |
| DOIs | |
| Publication status | Published - 15 Jun 2024 |
| Event | CICEE research seminar 2024 - Universidade Autónoma de Lisboa, Lisboa, Portugal Duration: 25 Jul 2024 → 25 Jul 2024 https://cicee.autonoma.pt/ciclo-de-seminarios-de-investigacao/2024-25/ |
Keywords
- Banks
- Capital structure
- Debt choice
- Securitization
- Covered bonds
- Straight bonds
