Panitza Library

Book Presentations & Readings Series: Securitization and Bank Loans, by Prof. Ali Termos

November 19, 2018

The process of loans’ securitization emerged in the 1970s and reached its peak in early 2000s running up to the financial crisis of 2008. I examine three main determinants of securitization that are discussed in this strand of literature: transferring of credit risk, enhancing liquidity, and fostering equity capital.  In this talk, I discuss the empirical challenges of testing the importance of these determinants to bank lending, while controlling for the bank size and its affiliation with a bank holding company in addition to other variables. I find that the securitization of mortgage loans is mainly driven by the need for liquidity. As for transferring risk, only charge-offs on allowance for loan and lease losses have increased with securitization, compared to other risk measures such as loan loss provision and non-performing loans.

Prior to joining AUBG, Ali Termos was Assistant Professor of Finance at the American University of Beirut (AUB) in Lebanon where he taught undergraduate and graduate courses in Risk Management, Corporate Finance, Quantitative Finance, and Managerial Economics. Ali’s research is centered on the impact of monetary policy on mortgage lending. His research is published in the Journal of Real Estate Research, Journal of Development Economics, and Economics Letters. Before joining AUB, Ali held positions at the American University of Sharjah (UAE) and Washington and Lee University (USA). Ali recently was for two years a part-time consultant on an EU-funded project that aims at measuring the impact of quarrying activities on the housing market in Lebanon. Ali holds a Ph.D. in Economics from North Carolina State University.

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