EconPapers    
Economics at your fingertips  
 

SECURITIZATION AS A TOOL OF BANK LIQUIDITY AND FUNDING MANAGEMENT BEFORE AND AFTER THE CRISIS: THE CASE OF THE EU

Sylwester Kozak () and Olga Teplova ()
Additional contact information
Olga Teplova: St. Petersburg State University of Economics and Finance

"e-Finanse", 2012, vol. 8, issue 4, 30-43

Abstract: Before the financial crisis securitization was commonly considered an efficient way of replacing illiquid assets with liquid securities (ABS), in which the risk was supposed to be adequately compensated by the tranching techniques. However, with the emergence of the crisis investors became more risk aversive and reluctant to incur ABS due to the rapidly deteriorating quality of the underlying assets caused by poor macroeconomic fundamentals. The limited adverse effects of the poor collateral performance is the main reason why chances for recovery of the ABS market in the EU are estimated more highly than in the USA. The analysis indicates that, driven by the ECB repo operations, the securitization market has almost lost the pre-crisis motives behind the issuance of ABS. Banks’ attitudes toward securitization as a refinancing tool and a mechanism to extract additional profit underwent a shift. As the findings of the article suggest, after the crisis securitization is widely seen by banks as a liquidity tool within the frame of repo deals with the ECB, and to a lesser extent as a refinancing tool. Market regulation contributed considerably to this shift.

Keywords: Financial system; ECB; Securitization Least Squares Method (search for similar items in EconPapers)
JEL-codes: F21 F36 G15 G21 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.e-finanse.com/artykuly_eng/233.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rze:efinan:v:8:y:2012:i:4:p:30-43

Access Statistics for this article

More articles in "e-Finanse" from University of Information Technology and Management, Institute of Financial Research and Analysis Contact information at EDIRC.
Bibliographic data for series maintained by Pawel Bochenek ( this e-mail address is bad, please contact ).

 
Page updated 2025-03-19
Handle: RePEc:rze:efinan:v:8:y:2012:i:4:p:30-43