Did private mortgage securitization contribute causally to the recent subprime lending boom, or was it simply a slightly more convenient way to finance lending that would have occurred anyway? We exploit a natural experiment in which the S&P rating agency increased costs of securitizing specific...

Does high leverage incentivize banks to systematically originate and hold riskier loans? I construct a novel data set consisting of 3 million small business and home mortgage loans, matched to the specific banks that originated them and verified to be held on bank portfolios, rather than sold. I...