Endogenous money and securitization. An analysis on united States (1999-2012)

In this paper we examine the behavior of loans supply by explicitly accounting for the money endogeneity arising from securitization bank’s activity. The empirical results with U.S. data provide strong evidence of money supply endogeneity under a regime in which securitization affects monetary transmission mechanism of monetary policy via the bank lending channel. The critical theoretical differences between the three competing approaches to the determination of the money supply are identified in terms of the importance of the private initiatives of banks in accommodating expansions of loans demand by using securitization. Specifically, in this paper we conclude short-run and long-run evidence in favor of structuralism approach