The Influences Of Credit Risk Transfer To Financial System Stability

Credit risk transfer is a general phenomenon of global financial practice in recent years, Due to the large-scale of credit risk transfer from bank system to insurance company, invest bank and other non-bank financial institutions. Bank and non-bank institutions change their risk disposition and operation. These actions influence the financial system stability. Subprime crisis’s breakout and furtherance remind us the development of credit risk transfer improves the risk management level of financial institutions and also influences the stability of financial system. This article explains how the crisis transferred through credit risk transfer market by searching the origination and development of subprime crisis. And it will base on this research to discuss how to develop credit risk transfer market for making financial system more stability.The emergence of CRT facilitates the risk management for lending institution and extends the investment source of institutional investor. Meanwhile, it also enhances efficiency and stability of financial system. However, the transactions in CRT also has negative influence for financial system, thereinto increase chance of information asymmetry and moral hazard among the main parts of market, make financial market more complex and opacity, influence the efficiency of monetary policy. Empirical analysis shows the CRT transactions will avianize bank risk monitor and control, amplify the bank credit scale, but have no influence to bank risk level and bank profit.The paper divided into for five chapters as follows:The first chapter is introduction, the second chapter is the explaination of origination and reason for subprime crisis. It introduces the flow of mortgage securitization firstly, and then analyses the immediate cause, fundamental cause, global factors and points out the crisis was transferred by credit risk transfer market. The third chapter discusses the development of credit risk transfer, researches the historical background, development characteristics of CRT and the most important tool of CRT as well as their characteristics. It also discusses the price of credit risk and development condition of other country CRT. The fourth chapter discusses the relationship between CRT and financial system stability. The fifth chapter gives the relative advice for developing credit risk transfer market in China.