This paper derives a bank capital allocation model and applies it in the determinants of securitization. According to … increase riskier loans to raise capital return, or to decrease loans to alleviate risk.Securitization is one way to alleviate … securitization to maximize utility. To derive a bank capital allocation model, HJB equation in control theory and a specific utility …

This study investigates the impact of securitization on the credit-risk taking behavior of banks. Using US bank holding … relationship between outstanding securitization and risk taking is primarily driven by securitizations of mortgages and home equity … credit-risk taking behavior. We attribute these results to the recourse commonly provided in securitization transactions that …