NBER paper tracks shift to ‘arms-length’ finance

Authors assess three drivers of move from bank lending to securities-based finance


New research explores the forces behind a shift from bank lending towards “arms-length transactions” such as securitisation.

Greg Buchak, Gregor Matvos, Tomasz Piskorski and Amit Seru document a decline in lending and a reduction in deposits with banks since the 1970s. Concurrently, the financial sector has provided a growing share of credit through securities, and savers have increasingly bought these assets.

The authors argue that the view of finance in which banks take in deposits and use their

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