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The future of securitisation: how to align incentives

Author

Listed:
  • Ingo Fender
  • Janet Mitchell

Abstract

This article reviews the recent collapse of global securitisation markets and the loss of investor confidence in them. It then sets out measures that could be taken to revive and strengthen the securitisation process, including mechanisms based on retention requirements for originators. It ends with a number of simple implications for policymakers and market practitioners.

Suggested Citation

  • Ingo Fender & Janet Mitchell, 2009. "The future of securitisation: how to align incentives," BIS Quarterly Review, Bank for International Settlements, September.
  • Handle: RePEc:bis:bisqtr:0909e
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    References listed on IDEAS

    as
    1. Paul S. Mills & John Kiff, 2007. "Money for Nothing and Checks for Free; Recent Developments in U.S. Subprime Mortgage Markets," IMF Working Papers 07/188, International Monetary Fund.
    2. Ingo Fender & Nikola Tarashev & Haibin Zhu, 2008. "Credit fundamentals, ratings and value-at-risk: CDOs versus corporate exposures," BIS Quarterly Review, Bank for International Settlements, March.
    3. Innes, Robert D., 1990. "Limited liability and incentive contracting with ex-ante action choices," Journal of Economic Theory, Elsevier, vol. 52(1), pages 45-67, October.
    4. Peter M. DeMarzo, 2005. "The Pooling and Tranching of Securities: A Model of Informed Intermediation," Review of Financial Studies, Society for Financial Studies, pages 1-35.
    5. Ingo Fender & Janet Mitchell, 2005. "Structured finance: complexity, risk and the use of ratings," BIS Quarterly Review, Bank for International Settlements, June.
    6. Franke, Günter & Krahnen, Jan Pieter, 2008. "The future of securitization," CFS Working Paper Series 2008/31, Center for Financial Studies (CFS).
    7. Ingo Fender & Janet Mitchell, 2005. "Structured finance: complexity, risk and the use of ratings," BIS Quarterly Review, Bank for International Settlements.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Blaise Gadanecz & Alper Kara & Philip Molyneux, 2011. "The value of repeat lending," BIS Working Papers 350, Bank for International Settlements.
    2. Frank A.G. den Butter, 2011. "The Macroeconomics of the Credit Crisis: In Search of Externalities for Macro Prudential Supervision," Chapters,in: Institutions and Regulation for Economic Growth?, chapter 10 Edward Elgar Publishing.
    3. repec:gam:jrisks:v:5:y:2017:i:4:p:55-:d:115890 is not listed on IDEAS
    4. W. Scott Frame & Lawrence J. White, 2010. "The Industrial Organization of the U.s. Single-Family Residential Mortgage Industry," Working Papers 10-11, New York University, Leonard N. Stern School of Business, Department of Economics.
    5. Emiel F.M. Wubben (ed.), 2011. "Institutions and Regulation for Economic Growth?," Books, Edward Elgar Publishing, number 14256, September.
    6. Frank A.G. den Butter, 2010. "The Macroeconomics of the Credit Crisis: In Search of Externalities for Macro-Prudential Supervision," Tinbergen Institute Discussion Papers 10-052/3, Tinbergen Institute.
    7. David Zalewski, 2010. "Securitization, Social Distance, and Financial Crises," Forum for Social Economics, Springer;The Association for Social Economics, pages 287-294.
    8. Adonis Antoniades & Nikola Tarashev, 2014. "Securitisations: tranching concentrates uncertainty," BIS Quarterly Review, Bank for International Settlements, December.
    9. Ugo Albertazzi & Ginette Eramo & Leonardo Gambacorta & Carmelo Salleo, 2011. "Securitization is not that evil after all," Temi di discussione (Economic working papers) 796, Bank of Italy, Economic Research and International Relations Area.
    10. Roman Inderst & Sebastian Pfeil, 2013. "Securitization and Compensation in Financial Institutions," Review of Finance, European Finance Association, pages 1323-1364.
    11. Aghion, Philippe & Hémous, David & Kharroubi, Enisse, 2014. "Cyclical fiscal policy, credit constraints, and industry growth," Journal of Monetary Economics, Elsevier, vol. 62(C), pages 41-58.
    12. Malekan, Sara & Dionne, Georges, 2014. "Securitization and optimal retention under moral hazard," Journal of Mathematical Economics, Elsevier, vol. 55(C), pages 74-85.
    13. IANCU, Aurel, 2013. "Extending Financialisation and Increasing Fragility of the Financial System," Working Papers of National Institute of Economic Research 130307, National Institute of Economic Research.
    14. Maarten van Oordt, 2017. "Credit Risk Transfer and Bank Insolvency Risk," Staff Working Papers 17-59, Bank of Canada.
    15. Georges Dionne & Sara Malekan, 2017. "Optimal Form of Retention for Securitized Loans under Moral Hazard," Risks, MDPI, Open Access Journal, vol. 5(4), pages 1-13, October.
    16. Jaime Caruana, 2010. "Financial Stability: Ten Questions and about Seven Answers," RBA Annual Conference Volume,in: Christopher Kent & Michael Robson (ed.), Reserve Bank of Australia 50th Anniversary Symposium Reserve Bank of Australia.
    17. Albertazzi, Ugo & Eramo, Ginette & Gambacorta, Leonardo & Salleo, Carmelo, 2015. "Asymmetric information in securitization: An empirical assessment," Journal of Monetary Economics, Elsevier, pages 33-49.
    18. Malamud, Semyon & Rui, Huaxia & Whinston, Andrew, 2013. "Optimal incentives and securitization of defaultable assets," Journal of Financial Economics, Elsevier, vol. 107(1), pages 111-135.

    More about this item

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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