Bank management expertise and asset securitization policies

Abstract

We explore how the expertise of a bank holding company's management team affects its asset securitization policies. We find management team members with an MBA degree and top management experience securitize more low risk loans while those with core functional executive positions securitize fewer high risk loans. In addition, internal liquidity, governance quality, and risk management quality moderate these effects. Moreover, risk management concerns are the main driver of the negative effect of the percentage of core functional executives on asset securitization. We also provide evidence that core functional executives deem securitized mortgage loans riskier after the subprime crisis. (C) 2019 Elsevier B.V. All rights reserved.