<p><br/></p><p><font size="4">In this paper we analyze whether the use of credit risk transfer instruments<br/>a&reg;ects the risk taking by large, international banks. Relying on a unique data set<br/>of European collateralized debt obligations (CDOs), we &macr;nd that the issue of CDOs<br/>tends to raise the systematic risk (equity beta) of the issuing bank. We also perform<br/>a cross-sectional analysis to identify determinants of the change in systematic risk,<br/>and &macr;nd that equity beta rises signi&macr;cantly more if the issuing bank is &macr;nancially<br/>weak (low pro&macr;tability and high leverage), and if it is domiciled in a bank-based<br/>&macr;nancial system. Overall, our &macr;ndings suggest that credit securitization goes hand<br/>in hand with an increase in the risk appetite of the issuing bank. Our &macr;ndings<br/>are also relevant for understanding the &macr;nancial stability implications of credit<br/>securitizations.</font></p><p></p>