A Study of Financial Assets Securitization
Date Issued
2006
Date
2006
Author(s)
Chun-Sheng Lee
DOI
zh-TW
Abstract
ABSTRCT
GRADUATE INSTITUTE OF FINANCE
NATIONAL TAIWAN UNIVERSITY
Name：CHUN-SHENG LEE JANUARY, 2006
Adviser：Professor Chau-Chen Yang, Ph. D.
Title： A Study of Financial Assets Securitization
This thesis , based on analysis of related literature, practical cases and pertinent laws and acts, is a research into relevant issues on financial asset securitization.
The framework of financial asset securitization mainly comprises Special Purpose Vehicles. Originators transfer assets to Special Purpose Vehicles, which issue Beneficiary Securities or asset-based securities and in turn sell them to investors. One of the purposes of transferring the assets is to isolate the risk of bankruptcy of the Originator so that the cash flow derived from the asset pool to pay principals and interests is not affected, thereby ensuring the rights of investors. It also makes the credit rating of the securities higher than that of the Originator, thus rendering them more appealing to the investors.
The core business of the banking sector in this country is traditional savings and loans, and differentials in interest rates between them are the major source of profits. Since loans are the principal assets, the onus of credit risk is entirely on the banks before obligators retire the debts. The ability to control credit risk is critical to performance. Mismanagement can lead to bankruptcy of banks.
Sufficient credit investigation before lending and close scrutiny after lending can control credit risk to some extent. However, securitization of financial assets in the forms of beneficiary securities and asset-based securities is widely practiced in that banks can not only transfer risk to investors but also collect fees and transform the structure of profits into a fee-based source. Asset-based securitization should be integral to the method of Assets & Liabilities management in the banking sector.
The question of whether banks can lower the ratio of NPL through securitization of loans is widely concerned in the banking sector. The asset pool which consists entirely of NPLs is prone to instability of cash flow and makes its securitization unappealing to investors. Experience from other countries demonstrates that asset pool with a certain proportion of normal loans can support cash flow, therefore making it more possible to succeed in securitization projects.
Subjects
金融資產證券化
特殊目的機構
financial asset securitization
Special Purpose Vehicles
Type
other
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