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Why do banks securitize? Evidence from Italy

Maria Mazzuca, Mariarosaria Agostino
September 2009 - n°9
Jel codes: G20, G21, G23

The paper explores the motivations underlying the securitization activity of Italian banks from 1999 to 2006. By estimating probit and proportional hazard duration models, in which the probability of placing securitizations is linked to a set of balance sheet indicators and a vector of further control variables, it tests the hypotheses of funding, specialization and regulatory capital arbitrage. Consistently with the funding hypothesis, the main conclusion is that Italian banks seem to securitize to diversify the available funding channels. Besides, the status of the bank on the Stock exchange and also its dimension positively affect the decision of securitizing