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Basel Ii Risk Management, Legal Issues Of Asset Securitization Research

Posted on:2010-03-20Degree:MasterType:Thesis
Country:ChinaCandidate:W XuFull Text:PDF
GTID:2206360275492131Subject:International law
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The author first introduces the transaction flow of an asset securitization and points out the risks under such a transaction.The risks of an asset securitization materially cover credit risk and liquidity risk.Under an asset securitization transaction, the major participants undertaking the risks include the issuing bank,the special purpose vehicle,the credit enhancers,and the investors.The transfer of the risks among those participants is complex and lacks transparency.The complexity and non-transparency of the risk transfer attract the attention of each country's banking supervisory authority.The author then analyzes and comments on the general and specific provisions of Basel Capital Accord on the risk management under an asset securitization transaction. Basel Capital AccordⅡhas been promulgated,recognizing the existence and importance of asset securitization,while at the same time requiring the banks dealing with asset securitization transactions to comply with the specific operational requirements,such as the true sale of the receivables.Basel Capital AccordⅡalso requires the banks to calculate the risk-weighted assets under an asset securitization transaction,depending on the risk valuation and the calculation formula.Most developed countries choose to directly adopt Basel Capital Accord and implement it through domestic banking regulations.Developing countries usually choose to draft their own domestic rules,making a reference to the provisions under Basel Capital Accord.However,the United States holds a negative attitude toward the implementation of Basel Capital AccordⅡ,choosing to delay its implementation.Its refusal of implementing Basel Capital AccordⅡresults in the ineffectiveness of its supervision over the participants of an asset securitization.At last,the author reviews the explosion and development of the subprime crisis in depth and analyzes some drawbacks of Basel Capital Accord.In 2007,the subprime crisis explodes.The subprime crisis is primarily a crisis in the domestic subprime mortgage market of the U.S.However,based on the oversea issuance of an asset securitization and the active participation of the financial institutions,the subprime crisis adds fuel to fire a global financial crisis.In the credit crisis,most financial institutions show their lack of capital adequacy and inability to absorb the risks directly or indirectly derived from asset securitizations.The credit crunch crisis makes financial institutions and government authorities to re-think of the risks of asset securitization and the current mode of supervision.They begin to realize the significance of the implementation of Basel Capital Accord in the field of asset securitization.However,the explosion of the credit crisis also reflects some drawbacks of the provisions under Basel Capital AccordⅡ.
Keywords/Search Tags:asset securitization, Basel Capital Accord, subprime, financial crisis
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