Securitization

Nektarios Michail

Chapter Chapter 9 in Money, Credit, and Crises, 2021, pp 157-181 from Springer

Abstract: Abstract No other banking activity has attracted as much attention in recent times as securitization. However, despite the huge publicity the topic has received, there has been no effort thus far to make the securitization process understandable, without relying on over-simplification and other rhetoric, usually unrelated to economics. To this end, this chapter firstly puts forth a simple, straightforward explanation of what securitization is and then traces its history to the 1970s and the rise of investment banks, while it also examines the reasons behind its initiation and prevalence over time. The impact of securitization on bank balance sheets is also elaborated through schematic representations of bank balance sheets before and after mortgage securitization. The chapter also includes items such as alternative, sub-prime, auto loan and credit card securitizations, and overviews the structure of securitized bonds from the investor’s perspective.

Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-030-64384-3_9

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DOI: 10.1007/978-3-030-64384-3_9

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