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Bank Funding, Securitization, and Loan Terms: Evidence from Foreign Currency Lending
Author(s) -
BROWN MARTIN,
KIRSCHENMANN KAROLIN,
ONGENA STEVEN
Publication year - 2014
Publication title -
journal of money, credit and banking
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.763
H-Index - 108
eISSN - 1538-4616
pISSN - 0022-2879
DOI - 10.1111/jmcb.12147
Subject(s) - currency , securitization , business , financial system , loan , cross collateralization , maturity (psychological) , non conforming loan , term loan , foreign exchange risk , non performing loan , finance , economics , monetary economics , psychology , developmental psychology
We examine how bank funding structure and securitization activities affect the currency denomination of business loans. We analyze a unique data set that includes information on the requested and granted loan currency for 99,490 loans granted to 57,464 firms by a Bulgarian bank. Our findings document that foreign currency lending is at least partially driven by bank eagerness to match the currency structure of assets with that of liabilities. Our results also show that loan currency, as well as loan amount and maturity, are adjusted to make loans eligible for securitization.