Securitization: Restoring Confidence in the Market

Abstract

The 2007–2008 financial crisis resulted in a global “flight-to-quality” that has seen investors withdraw from the securitization market almost completely. This has resulted in a drying-up of asset-backed security issuance from bank originators. However the securitization technique remains sound, and the market is a valuable source of bank liquidity. This article proposes a series of measures necessary to revitalize the securitization market, aimed at improving transparency and understanding of the asset class among investors. A restoration of market confidence can then take place in parallel with the emergence of the economy from recession.

TOPICS: Technical analysis, financial crises and financial market history