Securitization and monetary transmission mechanism: evidence from italy (1999-2009)

This paper investigates credit supply endogeneity in the Italian environment from 1999 to 2009. The study aims to shed more light on the relationship between securitization and the Italian monetary transmission mechanism during the two most recent financial crashes: the dot-com bubble burst (1998-1999) and the sub-prime mortgage crisis (2008-2009). Recently many works are focused on how securitization affects the relationship between credit channel and monetary policy. Altunbas et al. (2009) conclude that banks’ securitization increases loans supply insulating banking system from negative shocks of monetary policy. The empirical results show that securitization increases credit supply endogeneity reducing the effect of monetary policy on the Italian banking system.