Banks may relax their scrutiny of loans once they have securitised them, leading to a deterioration in the loans' credit quality, a working paper published by the European Central Bank (ECB) says.

In Securitization and credit quality, Alper Kara, David Marques-Ibanez and Steven Ongena use what they say is a "uniquely detailed data set from the euro-denominated syndicated loan market". They note that banks are usually better informed on the loans they originate than are other financial