Information cost and securitization

Zhongjie Fan, Zehao Liu and Dunzhe Tang

Economics Letters, 2024, vol. 239, issue C

Abstract: Securitization increases the complexity of assets while incurring associated costs, which enhances asset liquidity by curbing private information production and facilitating asset resale. The liquidity improvement reduces the immediate financing costs for firms, incentivizing them to engage in securitization. Firms have stronger incentive to securitize when the cost of securitization is lower or the underlying assets are less liquid.

Keywords: Information sensitivity; Securitization; Information cost (search for similar items in EconPapers)
JEL-codes: D81 D82 G10 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:239:y:2024:i:c:s016517652400243x

DOI: 10.1016/j.econlet.2024.111759

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