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- Title
Securitisation and Banks’ Net Interest Margins.
- Authors
Kirkwood, Joshua
- Abstract
This article develops a theoretical model of the effect of securitisation on banks’ net interest margins (NIMs). The model incorporates a dual role for securitisation. The direct effect accounts for the influence of securitisation on banks’ funding costs. The indirect effect recognises that the development of securitisation markets made it possible for mortgage originators to compete with banks, which contributed to a decline in banks’ market power and a fall in their NIMs. In estimating the model econometrically, this article finds evidence that both the direct and indirect effects worked to reduce Australian banks’ NIMs prior to the onset of the credit crisis.
- Subjects
BANKING industry finance; DERIVATIVE securities; SPREAD (Finance); MORTGAGE brokers; FINANCIAL crises
- Publication
Economic Record, 2010, Vol 86, Issue 274, p329
- ISSN
0013-0249
- Publication type
Article
- DOI
10.1111/j.1475-4932.2009.00618.x