Study On The Mechanism And Risk Implications Of Securitization In The Sub-prime Crisis

The United States sub-prime mortgage crisis, which is also called "financial hurricanes", was exploded in July 2007, developed into a serious financial crisis, and has invaded the real economy worldwide. The main opinions about its reason include improper monetary policy, inadequate regulation and so on. However, assets securitization,the most famous financial innovation in the 20th century, was largely blamed and was believed by someone to be responsible for this crisis.In this case, was securitization the source of this crisis? If not, what role did it play? How did it conduct and spread the risks?This thesis argues that the crisis is not the inevitable result of securitization. As a financial tool, asset securitization itself is neutral.Whether it makes contribution to the whole economy depends on how to use it. The participants' misusing of this tool, from commercial banks to credit rating agencies, results in the outbreak of crisis.However, it is true that securitization has some effects on the crisis.On one hand, it connects credit market and capital market, which results much more investors involves in the risk chain. On the other hand, it has an impact on some factors that responsible for crisis, such as information asymmetry and the deterioration of lending standards.From the perspective of securitization, this thesis tries to explore the underlying causes of the sub-prime mortgage crisis by analyzing negligence of the participants in the securitization's risk chain. Meanwhile, it attempts to investigate the mechanism of securitization in the crisis through analyzing its effects on the other factors of this crisis.A new analytical perspective possibly is an innovation of this thesis.