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The role of structured finance in the overall funding strategy of the CEE banks. The case of Asset Securitisation

In: FIKUSZ 2008 Business Sciences - Symposium for Young Researchers: Proceedings

Author

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  • Kazimierz Michal Kelles-Krauz

    (Vienna University of Economics and Business Administration)

Abstract

Since the political changes in Eastern Europe took place, banks in this region have experienced a significant reorganization in structure, core activities and business understanding. These changes have led to the development of banking entities which are flexible, open to the new banking perspectives and react promptly to market changes. However, extensively growing Central and Eastern European (“CEE”) markets require financial sources to meet the increasing demand for core banking intermediation. In order to maintain future growth banks will search for funding instruments which allow them to grow without having a balance sheet effect. In this respect structured finance (especially asset securitisation) may be a solution for these banks and also for other institutions looking for diversified funding sources or credit risk mitigants. It is expected that trend to use securitisation structures will gain on importance due to the decrease in the availability of core funding instrument which are currently deposits. CEE banks’ customers are becoming more aware of possibilities on how to allocate their capital efficiently therefore conventional banking and battle for traditional funding sources will become more expensive. Although, recent market turbulences have significantly reduced the demand for structured finance products in developed economies, the role of these instruments will not lose on importance in the future. The growing sophistication of CEE banking industry will force banks to create products which enable them to attract liquidity by more advanced means. Covered bonds, ECB repurchase agreements and privately placed securitisation transactions can give flexibility towards active balance sheet management in the times of significant liquidity problems. The development organisations like KfW, EBRD, IFC or FMO due to their statutory responsibilities can serve as intermediaries and “market maker” investors.

Suggested Citation

  • Kazimierz Michal Kelles-Krauz, 2008. "The role of structured finance in the overall funding strategy of the CEE banks. The case of Asset Securitisation," Proceedings Papers of Business Sciences: Symposium for Young Researchers (FIKUSZ) 2008, in: László Áron Kóczy (ed.),FIKUSZ 2008 Business Sciences - Symposium for Young Researchers: Proceedings, pages 93-106, Óbuda University, Keleti Faculty of Business and Management.
    • Handle: RePEc:pkk:sfyr08:93-106
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    File URL: http://kgk.uni-obuda.hu/sites/default/files/KellesKrauz_KM.pdf
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    References listed on IDEAS

    as
    1. Gary H. Stern, 2001. "Bank funding: challenges ahead but no crisis," The Region, Federal Reserve Bank of Minneapolis, vol. 15(Jun), pages 2-4.
    2. von Hagen, Jürgen & Dinger, Valeriya, 2005. "Banking sector (under?) development in Central and Eastern Europe," ZEI Working Papers B 06-2005, University of Bonn, ZEI - Center for European Integration Studies.
    3. Boot, Arnoud W. A & Schmeits, Anjolein, 1998. "Challenges to competitive banking: a theoretical perspective," Research in Economics, Elsevier, vol. 52(3), pages 255-270, September.
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    More about this item

    Keywords

    Structured Finance; Asset Securitisation;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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