01 October 2013

Seminar on securitization, bank-lending and monetary policy

A seminar on securitization, bank-lending and monetary policy will be held on Thursday 3 October at 15:00 in the Sölvhóll conference room at the Central Bank of Iceland.

The speaker will be Kristin Ann Van Gaasbeck, professor at California State University and currently a Fulbright teacher at the economics department of the University of Iceland. 

Using a bank lending channel framework, this study investigates how securitization affects the monetary transmission mechanism. The effectiveness of expansionary and contractionary policies is evaluated separately on the loan growth of banks divided by asset size, capital adequacy, and securitized asset holdings. There is evidence that securitization weakens the bank-lending channel but this result is not robust across all specifications. The implication of the analysis is that the effect of securitization on the efficacy of monetary policy depends greatly on the structure of the financial system.