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Regulation of securitisation in China: Learning from the US experience

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  • Ngwu, Franklin N.
  • Chen, Zheyang

Abstract

With the issuance of the latest adjustment on the Chinese securitisation regulatory framework, the originating institution only needs to hold 5% capital for each class of the securitised assets. Previously, the originating institution needed to hold a certain percentage of the lowest class of the securitised assets in one single securitisation deal, and the percentage in principal, should not be less than 5% of the entire term of the securitisation deal. This adjustment of the reduction of the minimum risk retention (MRR) requirement has to large extent, addressed the limitation of financing in participating in securitisation for Chinese banks. However, it has increased the risk of securitisation failure or even a crisis in the Chinese banking sector compared with the previous regulatory framework.

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  • Ngwu, Franklin N. & Chen, Zheyang, 2016. "Regulation of securitisation in China: Learning from the US experience," Research in International Business and Finance, Elsevier, vol. 37(C), pages 477-488.
    • Handle: RePEc:eee:riibaf:v:37:y:2016:i:c:p:477-488
    DOI: 10.1016/j.ribaf.2016.01.009
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