Abstract
Using a bank lending channel framework, this study investigates how securitization affects the efficacy of monetary policy. The effectiveness of expansionary and contractionary policies is evaluated separately on the loan growth of banks divided by asset size, capital adequacy, and securitized asset holdings. There is evidence that securitization weakens the bank-lending channel but this result is not robust across all specifications. The implication of the analysis is that the effect of securitization on the efficacy of monetary policy depends greatly on the structure of the financial system.