The Study Between Asset Securitization And Finance Development, Finance Stability

The development of asset securitization which began in 1970s has caused profound changes in finance. It is a great significance to study asset securitization to the establishment of finance policy and precaution of finance security. In the article, we study asset securitization from relative theory, international comparison and the review of Chinese research; then, build empirical model to test the relationship between asset securitization and finance development, the relationship between asset securitization and finance stability by international test on the theory analysis, besides, this article make a empirical study between asset securitization and effect of currency policies. In this paper, Granger causality test, cointegration test and vector error correction model, impulse responses analysis, dynamic panel data model and other methods are used.We divide this paper into three parts. The first one is relative theory and article review, which includes chapter 1 and 2; the second part is international comparison and research history, which is in the third chapter; the third part is the empirical analysis about asset securitization between finance stability, finance development and monetary policy, it consists of chapter 4, 5 and 6.The first chapter is about finance system and asset securitization, we first introduce relevant context, then give the theoretical relevance of finance development and asset securitization, finally, analyze asset securitization to the whole economy. This chapter in-depth studies 7 motivations of asset securitization and the relationship between asset securitization and finance structure, finance market.The following chapter is about asset securitization and finance stability. Based on the trading mechanism and role of asset securitization, we get the relationship about it to finance stability. The positive one is asset securitization can enhance finance labor division and specialization, reduce information asymmetry, improve efficiency of finance market and optimize capital structure. Although, it also reduces monetary policy spreading efficiency, increases market uncertainty, creates excessive credit, leading to increased possibility of finance risk.The Third chapter is international comparison and history of asset securitization. It is a descriptive chapter about asset securitization development, evolution and international comparison, aimed to study the mechanism and effect about it to finance system and finance development from a practical point of view. We analyze the asset securitization process of the United States, Japan and South Korea from institution, characteristics and other aspects. From above discussions, the chapter gives the history and features of Chinese asset securitization, and makes the conclusion that the development of asset securitization of our country needs the improvement of legal system, secondary market, finance intermediaries, and the support of government.Theoretical and empirical evidences of asset securitization to finance development are in the forth chapter. And in it, we divide into three sections, the first one is relative index systems of finance development, which includes intermediary indicators and market indicators; then are research methods, include cointegration test and Granger causality test; and finally, we use these methods to analyze the relationship between finance development and asset securitization by data of China and the United States.The main conclusions of this chapter are as following:(1) Induced institutional changes lead to deep impact to finance developmentUnder different institutions of China and the United States, apparently, the induced one changes lead to deep impact. Credit expansion and higher investment return promote American corporations and finance industry creating a demand to securitized products, credit expansion and higher real interest rates make a long-term stable positive promoting role on asset securitization. But in China, the process is not embodied some rule character. And we get that, the process of asset securitization has a impact to finance development.(2) Different results of institution changes come into being different mechanismsFrom mechanism of asset securitization to finance development, the institution changes originate from demands has had a stable long-term effect on finance development indicators. The impact of securitization indicators leads to a negative change of real interest rate; similarly, it also leads to a positive reaction of credit, resulting into stock market liquidity increasing, also the degree of finance deepening.Differently with above, the enforceable finance innovation has different results. The impact of securitization index only leads to stock market liquidity increasing,But no long-term stable impact to finance development index.The reason is that, when the finance innovation is endogenetic, the entire finance system, from finance intermediaries to credit reference agencies, finance market, is in a relatively efficient operation process, certainly, this will promote finance development and finance efficiency. However, in the enforceable one, all segments do not fully adapt to changes bring about finance innovation; therefore, finance innovation can not play a full role.(3) Asset securitization and finance deepening can be replaced by each otherWith the induced institution innovation, asset securitization as one form of credit expansion, has a similar effect to finance deepening index, so, they are a relationship of substitution. However, with enforceable institution change, the increased finance asset generated from asset securitization involves more currency into transactions, which results in the process of asset securitization need more currency to complement, so, they are complementary this time.Chapter V is the empirical research of asset securitization and finance stability.The first section is the evaluation index system of finance stability; the second part is building econometric models, analyzing the dynamic association of finance stability and asset securitization using dynamic panel data. The third part makes empirical study, gives the conclusions and finally gives the specific results between finance stability and asset securitization.This chapter gets following conclusions:(1) Securitization is self-promotionOverall, securitization is reversely effected by real interest rate and inflation rate; however, positively by economy growth. The results of dynamic panel data model estimate show that the level of securitization rate has the path dependence feature and mechanism of self-Promotion.(2) The reason of securitization is different in different countriesThe process of securitization in developed industrial countries is the natural result of economic development, and is little significant to bank running index and economic fluctuations. But in developing countries, it is an enforceable institution change result of mainly solving the operation problems of commercial banks. (3) the increase of securitization rate does not raise commercial banks operation riskSecuritization rate changes do not affect operation state of commercial banks, affect economic growth only. Similarly, securitization has some effect to inflation, but it is not significant; besides, real interest rate has no connection with securitization rate. So, there is no reason to show that the increase of securitization rate leading to commercial banks deterioration; in addition, securitization is not the cause of finance crisis, and the fundamental reason is the credit crisis, not securitization.Chapter VI is mainly about securitization and currency policy, liquidityWe divide this chapter into three parts; in the chapter, we firstly analyze the theory about asset securitization and the effect of monetary policy, and give the empirical result of them further; finally, is some conclusions and recommendations of related mechanism.The study of asset securitization and monetary policy shows that: (1) The development of asset securitization requires a reasonable amount of currency, and liquidity itself namely excessive; in addition, asset securitization does not mean good result in the country which virtual economy has a week association with real economy. (2) Different forms of institution change, the effect of asset securitization and monetary policy is different; under the condition of induced institution change, the effect of the monetary policy which is affected by asset securitization will be undermined; but enforceable one, it will be enhanced.(3)the credit level and securitization has a relationship of both alternative and complementary, under the condition of induced institution change, the effect of credit channel which is affected by asset securitization will be undermined; but enforceable one, it also will be improved.In summary, we believe that a country which liquidity is reasonable and monetary policy instruments is mature, asset securitization has a good effect; as a result of institution change, induced institutional change will have a better evolution. Therefore, we must first solve the problem of excessive liquidity, then fully consider system requirement of business and finance intermediation, and choose reasonable institution, which are important works prior to asset securitization. So, in the process of securitization, it is important to strengthen finance intermediaries supervision, especially the supervision of securitization products.