Securitization Dynamics in U.S. Banks: Impacts on Credit Supply, Capital Requirements, and Profitability

This research explores the securitization activity in US banks between the year 2000 and year 2017. Our aim was to examine how the securitization in banks affected three aspects: the credit supply, capital requirements, and the profitability in US banks. Our research was based on data collected from thirty-three banks over an eighteen-year period. Our methodology was based on a panel linear regression analysis that adopts the approach of investigation of securitization trends and predictive interactions among those three financial variables. Our findings demonstrate a positive correlation between bank securitization activities and regulatory capital requirements. We also found a direct link between securitization and bank profitability. However, we couldn't confirm a connection between securitization and credit supply, despite suggestions in some prior literature