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The way we live now: Financialization and securitization

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  • Buchanan, Bonnie G.

Abstract

Securitization is a global multi-trillion dollar market that embodies financialization. Prior to the recent financial crisis, securitization fueled an unsustainable increase in mortgage credit. As the recent financial crisis reveals, securitization increased credit market volatility and was heightened by a reliance on debt and incentive schemes that focused on short-term profits. As extensive global reform of the securitization market takes place, there are serious reservations about the sustainability of securitization. In this paper I provide a critical perspective on securitization through a number of lenses. The story of securitization comes down to the globalization of finance and the declining importance of banks. I provide an historical assessment of securitization as well as its rise and fall over the last four decades. I also provide a critical perspective on the role of ethics and risk management in securitization in the context of the recent financial crisis. Finally, as many agencies reconsider the future of securitization, I discuss whether all assets are necessarily suitable candidates for the process.

Suggested Citation

  • Buchanan, Bonnie G., 2017. "The way we live now: Financialization and securitization," Research in International Business and Finance, Elsevier, vol. 39(PB), pages 663-677.
  • Handle: RePEc:eee:riibaf:v:39:y:2017:i:pb:p:663-677
    DOI: 10.1016/j.ribaf.2015.11.019
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    References listed on IDEAS

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    1. repec:eee:riibaf:v:42:y:2017:i:c:p:784-793 is not listed on IDEAS
    2. repec:eee:finsta:v:34:y:2018:i:c:p:61-85 is not listed on IDEAS
    3. Papanikolaou, Nikolaos I., 2018. "To be bailed out or to be left to fail? A dynamic competing risks hazard analysis," Journal of Financial Stability, Elsevier, vol. 34(C), pages 61-85.
    4. repec:eee:riibaf:v:42:y:2017:i:c:p:285-294 is not listed on IDEAS

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