Do credit risk transfers in general, and loan sales and securitizations in particular, by financial institutions enhance credit availability and financial stability? Or do they allow assets of poor credit quality to spread to unprotected investors, and thus create financial crises and destroy...

In this paper, we investigate the impact of loan securitization on entrepreneurial activity in the United States. We first provide evidence that securitization alters the lending strategy for small business by both small and large banks. In particular, we find a positive relation between the...