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Board of Governors of the Federal Reserve System (US)
Finance and Economics Discussion Series
Intermediary Segmentation in the Commercial Real Estate Market
David P. Glancy
John Krainer
Robert J. Kurtzman
Joseph B. Nichols
Abstract

Banks, life insurers, and commercial mortgage-backed securities (CMBS) lenders originate the vast majority of U.S. commercial real estate (CRE) loans. While these lenders compete in the same market, they differ in how they are funded and regulated, and therefore specialize in loans with different characteristics. We harmonize loan-level data across the lenders and review how their CRE portfolios differ. We then exploit cross-sectional differences in loan portfolios to estimate a simple model of frictional substitution across lender types. The substitution patterns in the model match well the observed shift of borrowers away from CMBS when CMBS spreads rose in 2016.


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David P. Glancy & John Krainer & Robert J. Kurtzman & Joseph B. Nichols, Intermediary Segmentation in the Commercial Real Estate Market, Board of Governors of the Federal Reserve System (US), Finance and Economics Discussion Series 2019-079, 15 Nov 2019.
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Keywords: Commercial real estate ; Life insurers ; Segmentation
DOI: 10.17016/FEDS.2019.079
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