Motivations for Bank Decision on Financial Asset Securitizations
Journal
證券市場發展季刊
Journal Volume
23
Journal Issue
1
Pages
159-200
Date Issued
2011
Author(s)
陳維慈(Wei-Tzu Chen)
Abstract
The creation of innovative structures of financial asset securitization (hereafter securitization) provides banks with a new avenue to operate businesses by breaking the vertically integrated intermediation process into distinct steps. In contrast to their traditional role as intermediaries between borrowers and investors, banks can evaluate which steps in the securitization process they possess the competitive advantage and focus on a limited number of roles. In view of the current and potential growth of securitizations, whether to engage in securitizations and on what extent, thus, have become an important business policy choice in banking industry. As the first country introducing securitizations, the U.S. has the largest securitization market with 7.2 trillion outstanding volume of securitizations at the end of 2004 in the world. Thus, this study empirically investigates the motivations of U.S. bank holding companies for securitizations and sheds light on the widespread use of securitizations in banking industry. Our findings present that comparative advantages, liquidity needs, capital requirements, and enhanced income are the potential aspects driving banks in loan origination to securitize.
Type
journal article