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In the financial industry, typical indirect-financial institution attracts deposit, inter-bank loan, or issuing negotiable certificate of time deposit and bonds. After collecting money from excess capital units through auditing procedure then loan to the needed parties as a financial intermediary in the market. The roles of financial institutions such as banks are acting as a financial intermediary by providing buy-sell funding to enterprises or individuals. Those banks actually take whole funding liquidity risk to exchange main resource of bank’s profitability. Once failure in managing risk or facing dynamically financial environment changing, bank may engage in difficulty and cause serious financial crisis. The originators pool and reorganize those assets, which could create cash flow into small-amount unit security and sell to the investors. By this way originator don’t have to wait till maturity and buyback those securities. That is why by using financial asset securitization will help financial institution to improve asset/liability management, spread asset risk and increase the ratio of equity to assets. At the same time, this will improve the effect and efficiency of finance institution’s operating and open up the funding market. Mortgage securitization can raise banks’ capital adequacy and current ratio. By way of asset securitization, the originators enjoy higher asset liquidity, lower funding cost, and improved capital ratio, while investors can use mortgage-backed securities to diversity their portfolios, improve liquidity and enhance yields. For originators, securitization is not only lower the cost of capital, increase the net profit but also enhances the liquidity of cash and balance the assets’ structure. Because of these current issues of the products not being fully understood, in this thesis we aim at clarifying the key concepts of the securitization, the classification of the products and motivations for the classification, the procedure of securitization, and the advantages and disadvantages of securitization. In the meantime, we survey the recent development in securitization and point out the weakness of current products and offer some suggestions for further improvement.
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