The incentive structure of the originate-to-distribute model of lending, bank credit supply and risk taking behaviour of U.S. commercial banks
The Originate-to-distribute (OTD) model allows banks to sell or securitize loans rather than holding them until maturity. We investigate the incentives for using OTD lending and its impact on credit supply and bank risk taking behavior based on their involvements in the OTD model and bank size. Bank...
| Main Author: | |
|---|---|
| Format: | Thesis (University of Nottingham only) |
| Language: | English |
| Published: |
2015
|
| Subjects: | |
| Online Access: | https://eprints.nottingham.ac.uk/30868/ |
| _version_ | 1848794079694946304 |
|---|---|
| author | Chen, Conghui |
| author_facet | Chen, Conghui |
| author_sort | Chen, Conghui |
| building | Nottingham Research Data Repository |
| collection | Online Access |
| description | The Originate-to-distribute (OTD) model allows banks to sell or securitize loans rather than holding them until maturity. We investigate the incentives for using OTD lending and its impact on credit supply and bank risk taking behavior based on their involvements in the OTD model and bank size. Banks involved into OTD lending have more OTD loans and riskier mortgage portfolios. Funding cost reduction and liquidity needs are more important for high-OTD banks and small banks and regulatory capital arbitrage can only be found in small banks. Moreover, we find that OTD lending increase credit supply, but it has adverse effect on bank risk, especially for small banks involved in the model. |
| first_indexed | 2025-11-14T19:10:30Z |
| format | Thesis (University of Nottingham only) |
| id | nottingham-30868 |
| institution | University of Nottingham Malaysia Campus |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-14T19:10:30Z |
| publishDate | 2015 |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | nottingham-308682025-02-28T11:37:27Z https://eprints.nottingham.ac.uk/30868/ The incentive structure of the originate-to-distribute model of lending, bank credit supply and risk taking behaviour of U.S. commercial banks Chen, Conghui The Originate-to-distribute (OTD) model allows banks to sell or securitize loans rather than holding them until maturity. We investigate the incentives for using OTD lending and its impact on credit supply and bank risk taking behavior based on their involvements in the OTD model and bank size. Banks involved into OTD lending have more OTD loans and riskier mortgage portfolios. Funding cost reduction and liquidity needs are more important for high-OTD banks and small banks and regulatory capital arbitrage can only be found in small banks. Moreover, we find that OTD lending increase credit supply, but it has adverse effect on bank risk, especially for small banks involved in the model. 2015-12-07 Thesis (University of Nottingham only) NonPeerReviewed application/pdf en arr https://eprints.nottingham.ac.uk/30868/1/Final.pdf Chen, Conghui (2015) The incentive structure of the originate-to-distribute model of lending, bank credit supply and risk taking behaviour of U.S. commercial banks. PhD thesis, University of Nottingham. Bank loans banks and banking risk management United States |
| spellingShingle | Bank loans banks and banking risk management United States Chen, Conghui The incentive structure of the originate-to-distribute model of lending, bank credit supply and risk taking behaviour of U.S. commercial banks |
| title | The incentive structure of the originate-to-distribute model of lending, bank credit supply and risk taking behaviour of U.S. commercial banks |
| title_full | The incentive structure of the originate-to-distribute model of lending, bank credit supply and risk taking behaviour of U.S. commercial banks |
| title_fullStr | The incentive structure of the originate-to-distribute model of lending, bank credit supply and risk taking behaviour of U.S. commercial banks |
| title_full_unstemmed | The incentive structure of the originate-to-distribute model of lending, bank credit supply and risk taking behaviour of U.S. commercial banks |
| title_short | The incentive structure of the originate-to-distribute model of lending, bank credit supply and risk taking behaviour of U.S. commercial banks |
| title_sort | incentive structure of the originate-to-distribute model of lending, bank credit supply and risk taking behaviour of u.s. commercial banks |
| topic | Bank loans banks and banking risk management United States |
| url | https://eprints.nottingham.ac.uk/30868/ |