Articles

Can Securitization Work? Economic, Structural, and Policy Considerations

T. RIDDIOUGH

Journal of Portfolio Management

2011, n°Special Issue: SI

Départements : Finance

Mots clés : CREDIT CRISIS; MARKETS


Structured asset securitization is capable of generating a number of economic benefits including liquidity provision, an increased ability to manage risk, and value enhancement through the pooling and partitioning of cash flows. But the recent financial crisis has exposed numerous structural flaws, which has led many observers to question whether asset- and mortgage-backed securities should be classified as financial weapons of mass destruction" that require strict containment and possibly even elimination. In this article, Riddiough considers the fundamental economic trade-offs associated with securitization with an eye toward policy development, concluding that asset securitization can work. Whether it actually will work depends on how policymakers respond to the significant challenges of reregulating the financial system.


JavaScriptSettings