Working Paper: NBER ID: w18611
Authors: Gary Gorton; Andrew Metrick
Abstract: We survey the literature on securitization and lay out a research program for its open questions. Securitization is the process by which loans, previously held to maturity on the balance sheets of financial intermediaries, are sold in capital markets. Securitization has grown from a small amount in 1990 to a pre-crisis issuance amount that makes it one of the largest capital markets. In 2005 the amount of non-mortgage asset-backed securities issued in U.S. capital markets exceeded the amount of U.S. corporate debt issued, and these securitized bonds - even those unrelated to subprime mortgages -- were at center of the recent financial crisis. Nevertheless, despite the transformative effect of securitization on financial intermediation, the literature is still relatively small and many fundamental questions remain open.
Keywords: Securitization; Financial Markets; Asset-Backed Securities
JEL Codes: E0; G0; G2
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| changes in banking regulations (G28) | increased securitization practices (F65) |
| increased securitization practices (F65) | increased availability of consumer credit (G51) |
| securitization process (G10) | altered incentives and behaviors of financial intermediaries (G21) |
| collapse of securitized assets (F65) | direct impact on broader financial system (F65) |