A study by European Central Bank economists finds that synthetic securitization issuance has a significantly stronger impact on bank dividends than corporate lending. The research suggests that banks may prioritize using synthetic risk transfer to free up capital for shareholder returns rather than expanding credit to the real economy. This finding raises regulatory considerations about capital allocation in banking.
Economists at the European Central Bank (ECB) found that a 1% rise in synthetic securitization issuance lifts bank dividends at a rate three times higher than an equivalent rise in corporate lending. That points to something pretty blunt: banks may favor synthetic risk transfer as a way to free up capital for shareholder payouts instead of pushing more credit into the real economy. (Source: Crypto Briefing)
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