Deposit competition and mortgage securitization

Danny McGowan, Huyen Ngyuen, Klaus Schaeck

Research output: Contribution to journalArticle (Academic Journal)peer-review


We study how deposit competition affects a bank’s decision to securitize mortgages. Exploiting the state-specific removal of deposit market caps across the US as a source of competition, we find a 7.1 percentage point increase in the probability that banks securitize mortgage loans. This result is driven by an 11 basis point increase in deposit costs and corresponding reductions in banks’ deposit holdings. Our results are strongest among banks that rely more on deposit funding. These findings highlight a hitherto undocumented and unintended regulatory cause that motivates banks to adopt the originate-to-distribute model.
Original languageEnglish
JournalJournal of Money, Credit and Banking
Publication statusAccepted/In press - 23 Apr 2024


Dive into the research topics of 'Deposit competition and mortgage securitization'. Together they form a unique fingerprint.

Cite this