Research On The Impact Of The Asset Securitization To Financial Stability

With its rapid development, securitization has significant effects on financial system, including financial markets, institutions and monetary policies. This dissertation analyzes the effects of securitization on financial markets, banking system, monetary policy and regulatory system.In the first chapter, based on carding related research results of asset securitization, the writer proposes the research method, the structure and the innovation of the paper. In the second chapter, the concept of asset securitization is defined, and this paper discusses related theories (asset restructuring theory, risk isolation theory and the principle of credit enhancement) in-depth. in addition, this paper explores the analysis of the content of financial stability, define its nature, and further assess the situation. In chapterâ…¢, the writer analyzes the influences of asset securitization on the stability of financial institution in central bank and commercial banks two perspectives. Chapter IV describes the impacts of asset securitization on the stability of financial markets:To broaden the breadth of financial markets; improve levels of financial market structure; optimize our financial structure; rich variety of financial market transactions; improve financial market flexibility. Chapter V describes the risk of "capital regulatory arbitrage" of the bank, and establish minimum capital ratio model to guard against such risks. Chapter VI summarizes the thesis and outlooks it.Especially, aiming at the shortcomings of the literature relative to the topic, the following problem is studied with emphasis in this paper:A model of least capital ratio is set up to replace the present capital adequacy calculation in this dissertation. One main negative effects of securitization is that it makes financial regulation more complicated and difficult, and it makes the risks of commercial banks more difficult to be discovered, and banks more likely to pursue risks. The reason is that there is a fault in the current calculation of capital adequacy, which motivates the banks to securitize their assets for regulatory capital arbitrage. So this paper builds a model of least capital ratio to improve the current calculation of capital adequacy to stop the banks from regulatory arbitrage, and reduces the negative effects of securitization consequently.