So how exactly does this securitization impact the credit expansion and company period?
The first aftereffect of securitization is move the credit threat of the loans through the banking institutions’ balance sheets to your investors through asset-backed securities (Gertchev, 2009). This ‘regulatory arbitrage’ enables institutions to circumvent book and capital adequacy needs and, consequently, to improve their credit expansion. The reason being banking institutions have to hold a level that is minimum of capital in terms of risk-weighted assets. When banking institutions offer the pool of dangerous loans up to an entity that is third they reduce steadily the quantity of dangerous assets and boost their money adequacy ratio. 继续阅读II. The effect of Shadow Banking in the Traditional Banks’ capacity to Expand Credit