Why Do Banks Securitise? Evidence from Italy

We explore the motivations underlying the securitization transactions placed by the Italian banks from 1999 to 2006. By estimating probit and proportional hazard duration models, in which the probability of placing securitizations is linked to a set of balance sheet indicators and a vector of further control variables, we test the hypotheses of funding, specialization and regulatory capital arbitrage. Consistently with the funding hypothesis, our main conclusion is that Italian banks seem to securitize to diversify the available funding channels. Besides, the status of the bank on the Stock exchange and also its dimension positively affect the decision of securitizing