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CLO (Collateralized Loan Obligation) Market and Corporate Lending

Gallo, A. ORCID: 0000-0002-8355-1689 & Park, M. (2022). CLO (Collateralized Loan Obligation) Market and Corporate Lending. Journal of Money, Credit and Banking, doi: 10.1111/jmcb.12941

Abstract

We investigate whether access to the collateralized loan obligation (CLO) market as collateral managers or underwriters affects lenders' ability to overcome an idiosyncratic adverse shock in the corporate lending market. In a triple difference-in-differences setting, we find that lenders decrease their origination of loans following a negative shock; however, those with CLO access become more likely to arrange deals with securitizable facilities (Term B). Moreover, they choose to arrange deals with smaller size on-balance-sheet lending (Term A). The results suggest that securitization is actively used by lenders to switch to off-balance-sheet lending and to reduce the risk retained on the balance sheet.

Publication Type: Article
Additional Information: This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.
Publisher Keywords: structured finance, collateralized loan obligations (CLOs), syndicated loans
Subjects: H Social Sciences > HG Finance
Departments: Bayes Business School > Finance
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