Bankruptcy Remoteness and Incentive‐compatible Securitization

Gabriella Chiesa

Financial Markets, Institutions & Instruments, 2015, vol. 24, issue 2-3, 241-265

Abstract: Securitization involves both the risk allocation and claims' transferability/liquidity. A key ingredient of liquidity/claim‐transferability is bankruptcy remoteness of the securitized assets. We analyze the implications of the bankruptcy‐remoteness created by securitization on risk allocation and bank monitoring incentives, in relation to the bank's liability structure; and the regulatory/policy issues it gives rise to. We demonstrate that (1) the need for regulation arises when securitization (and bankruptcy remoteness) coexists with deposit‐taking; and (2) regulation that imposes the same capital requirements on a bank irrespective of whether loans are securitized or not will have welfare implications. We also explain the need for narrow‐securitized banking.

Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/fmii.12029

Related works:
Working Paper: Bankruptcy Remoteness and Incentive-compatible Securitization (2014)
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:wly:finmar:v:24:y:2015:i:2-3:p:241-265

Access Statistics for this article

More articles in Financial Markets, Institutions & Instruments from John Wiley & Sons
Bibliographic data for series maintained by Wiley Content Delivery ().