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Structured Finance, Risk Management, and the Recent Financial Crisis

Georges Dionne

Cahiers de recherche from CIRPEE

Abstract: Structured finance is often mentioned as the main cause of the latest financial crisis. We argue that structured finance per se did not trigger the last financial crisis. The crisis was propagated around the world because of poor risk management such as agency problems in the securitization market, poor rating and pricing standards, rating agency incentives, lack of market transparency, the search for higher yields by top decision makers and the failure of regulators and central banks to understand the implications of the changing environment.

Keywords: Structured finance; risk management; financial crisis; collateral debt obligation (CDO); asset back commercial paper (ABCP); rating; pricing; securitization; regulation of financial markets (search for similar items in EconPapers)
JEL-codes: D81 D82 D86 E5 G01 G12 G14 G32 G33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-reg and nep-rmg
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:lvl:lacicr:0944

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