Portfolio Sales and Signaling
Spiros Bougheas () and
Timothy Worrall ()
No 6354, CESifo Working Paper Series from CESifo Group Munich
A common practice of banks has been to pool assets of different qualities and then sell a fraction of the newly created portfolios to investors. We extend the signaling model for single sales of risky assets to portfolio sales. We identify conditions under which signaling at the portfolio level dominates signaling at the single asset level. In particular, when banks have better information about loan types on their books, and some commitment power to sales, can profit by pooling assets whilst retaining a skin in the game.
Keywords: securitization; skin in the game; signaling; tranching (search for similar items in EconPapers)
JEL-codes: D82 G21 G23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban
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Journal Article: Portfolio sales and signaling (2019)
Working Paper: Portfolio Sales and Signaling (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_6354
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