A Research On Implementing Mortgage-Backed Securitization In Commercial Banks Of China

Mortgage-backed securitization first raised in the United States in1970s anddeveloped fast since then. It has been very important and common inapplication of financial instrument in some developed countries. However,mortgage-backed securitization develops relatively slowly in China. ChinaConstruction Bank issuing Jianyuan2005-1personal housing mortgage-backedsecurities indicated that Chinese mortgage-backed securitization had essentiallystarted on December15th,2005. When our country actively developedmortgage-backed securitization business, a subprime mortgage crisis swept theAmerican economy since2007, and quickly spread to the global economy andfinancial markets. As it is an alarm for our fledgling mortgage-backedsecuritization, people begin to question its validity. Commercial banks which carryout mortgage-backed securitization business should pay sufficient attention, sum upthe subprime crisis experience and lessons and avoid the crisis happening again. Itis greatly significant to implement mortgage-backed securitization in our country.On the basis of analyzing credit risk, interest rate risk, liquidity risk andprepayment risk of China’s commercial banks, this paper puts forward the necessityof implementing mortgage-backed securitization, and then gives an empiricalanalysis on the “Jianyuan2005-1”. Simultaneously, On the basis of reflecting therelationship between the US subprime crisis and the asset securitization, this paperindicates that the root of the subprime mortgage crisis has nothing to designmortgage-backed securitization.According to the foregoing analysis, this paper makes specific policyrecommendations for implementing mortgage-backed securitization in China’scommercial banks: paying close attention to prices and economic trends;strengthening the customer’s review efforts; standardizing the cooperation andcompetition in commercial interbank; strengthening the supervision of governmentdepartments and encouraging the government to provide guarantees; vigorouslycultivating institutional investors; paying attention to train professional personnel. On the basis of analyzing the risk of commercial banks and the necessary ofimplementing mortgage-backed securitization, this paper makes specific policyrecommendations. It’s real significant and reference valued for implementingmortgage-backed securitization in China’s commercial banks.