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9780312125158

Securitization

by
  • ISBN13:

    9780312125158

  • ISBN10:

    0312125151

  • Format: Hardcover
  • Copyright: 1995-09-01
  • Publisher: Palgrave Macmillan
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List Price: $169.99

Summary

The increasing trend towards the securitization of retail and wholesale financial assets is examined in depth, with various chapters devoted to the characteristics and significance of the different securitized assets and securitization techniques. Against this backdrop, the author offers an insightful scenario for the future of commercial and investment banking over the next two decades and provides a new mindset within which senior bankers can make their strategic banking decisions for the twenty-first century. This book thus develops and provides evidence for a completely new theory of financial system development: the 'systemic theory'. It is a theory of how the financial system develops, not on a singular line of evolution towards greater efficiency as generally accepted, but through the parallel development and cooperation of its various subsystems. This type of development can increase both efficiencies and inefficiencies in the financial system.

Table of Contents

List of Figures
ix
List of Tables
x
List of Abbreviations
xi
Preface xiii
Introduction 1(8)
PART I SECURITIZATION: A MACRO AND MICRO ECONOMIC PERSPECTIVE
Introduction to Part I
9(2)
The Development of Securitization and International Commercial Banking: An Historical Perspective
11(22)
Introduction: The European Roots
11(1)
The Colonization Period
11(1)
The US Experience
12(2)
The Early Twentieth Century
14(1)
After the Crash
15(1)
The International Stage Post Second World War
15(2)
The Eurobond Market in the 1960s
17(1)
The Growth of Floating Rate Syndicated Lending in the 1970s
18(2)
The 1980s: A Return to the Status Quo
20(3)
Commercial Bank Support: The Re-emergence of the Symbiotic Relationship
23(2)
Direct investment
23(1)
Liquidity support
23(1)
Banks as borrowers in the securities markets
24(1)
The Rebirth of Syndicated Lending
25(3)
Multi-option facilities (MOFs)
25(1)
Highly leveraged transactions (HLTs) and loan sales
25(3)
Conclusion
28(5)
Securitization and Financial Innovation
33(14)
Introduction
33(2)
Creating a Taxonomy for Financial Innovation
35(4)
The Institutional Incentive for Financial Innovation
39(2)
Conclusion
41(6)
PART II THE SECURITIZED INNOVATIONS
Introduction to Part II
45(2)
From Revolving Underwriting Facilities (RUFs) to Eurocommercial Paper (ECP) and Medium-Term Notes (MTNs)
47(28)
Introduction
47(3)
Market Evolution and Growth
50(1)
Sole Placing Agency (SPA)
51(1)
Multiple Placing Agency (MPA)
51(1)
Tender Panel (TP)
52(1)
Continuous Tender Panel (CTP)
53(1)
Issuer Set Margin (ISM)
53(1)
Assessment of Placement Methods
54(1)
The Market Players
55(2)
The investors
55(1)
The borrowers
56(1)
Pricing a RUF
57(3)
Annual underwriting fee (or facility fee)
57(1)
Arrangement fee (or front-end fee)
58(1)
Yield
58(2)
The Decline of the RUF
60(2)
Eurocommercial Paper: Emergence and Growth
62(2)
The Instrument
64(2)
A Comparison with other Short-Term Instruments
66(1)
Placement Versus Trading
67(3)
Conclusion
70(1)
Appendix 3.1: Determining the Discounted Issue Price and Maximum Yield
71(4)
The Securitization of Wholesale Lending
75(16)
Introduction
75(1)
History of Loan Sales
75(2)
The Market Players
77(1)
Increasing the Marketability of Banks' International Wholesale Assets
78(8)
Trading LDC loans
78(2)
Securitizing international wholesale lending
80(6)
Conclusion
86(1)
Appendix 4.1: UK Accounting Standards for Loan Transfers
87(4)
The US Secondary Mortgage Market
91(24)
Introduction
91(2)
Historical Development of the US Securitized Mortgage Market
93(2)
The Establishment of Federal Secondary Mortgage Agencies
95(1)
Whole Loan Trading
96(1)
Mortgage Participation Certificates
97(1)
Mortgage Pass-Through Certificates
98(1)
GNMA Pass-Through Securities
99(1)
FHLMC and FNMA Pass-Through Securities
99(1)
Private Pass-Through Securities
100(1)
The Pass-Through's Limitations
100(1)
Mortgage Backed Bonds
101(1)
Mortgage Pay-Throughs or Cashflow Bonds
102(1)
Collateralized Mortgage Obligations (CMOs)
103(1)
Investor Segmentation
104(1)
Benefits to the Investor
105(1)
Benefits to the Issuer
106(1)
Comparing the Different Mortgage Securities
107(3)
Seeking the Euromarket Investor
110(1)
Conclusion
110(1)
Appendix 5.1: US Accounting Standards for Asset Securitization
111(4)
The Securitization of UK Mortgages
115(14)
Introduction
115(1)
The Changing Face of the UK Mortgage Market
115(4)
The Emergence of Centralized Lenders in the Sterling Mortgage-Backed Securities Market
119(2)
Prospects for the Market
121(2)
Regulatory Constraints
123(2)
Conclusion
125(1)
Appendix 6.1: UK Accounting Standards for Asset Securitization
126(3)
The Securitization of Non-Mortgage Retail Assets
129(14)
Introduction
129(2)
Structure
131(1)
Pass-Through Structures
131(1)
Pay-Through Structures
132(1)
Credit Enhancement
132(1)
Ratings
133(1)
Other Markets for Asset-Backed Securities
134(1)
The Regulatory Environment
135(1)
Conclusion
136(7)
PART III THE ECONOMIC RATIONALE FOR SECURITIZATION
Introduction to Part III
141(2)
Efficiency and Safety: Finding the Balance
143(20)
Introduction
143(1)
The Relative Efficiency of Bank and Market Intermediation
144(5)
Assessment
149(2)
The Effect of Securitization on systemic Risk
151(1)
Securitization and Systemic Risk: The Theory
152(1)
Securitization and Systemic Risk: A Practical Application
153(3)
The Disaster Myopia Hypothesis
156(2)
Shocks Versus Crises
158(1)
Conclusion
159(4)
Conclusion 163(4)
Glossary of Terms 167(6)
Bibliography 173(4)
Index 177

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