Research On Risk Analysis And Conduction Of Fundamental Assets Of Asset Securitization

Asset securitization, which has been born amid the wave of financial innovation since 1960s and 1970s, has developed the world financial market significantly. As a brand-new financial instrument, it has created many products to meet the demands of the financial market. It also enjoys the incomparable advantage in improving the liquidity of assets, widening the financing and investment channel and spreading risks. When entering the 21st century, the development of asset securitization comes into the golden period and becomes more and more important with the openness of international financial market and the development of financial globalization. Nevertheless, governments all around the world have strengthened the control over the business of asset securitization since subprime crisis occurred in the USA in 2007 and was rejected from then on. As time goes by, asset securitization once again stands out in resources allocation and comes back to the stage of the financial market. It turns out that asset securitization is irreplaceable and should be paid much attention.China’s asset securitization business was restarted in 2012, and has developed rapidly since then. It reached the new heights in 2014 both in the business and capital amounts. Under the circumstances of accelerating the reform of financial market, expanding social financing channels and revitalizing the stock assets, asset securitization will embrace the greater development in the future. Meanwhile, the credit assets stock from China’s commercial banks is huge while the enterprise financing demands have been increasing and social infrastructure construction is still lacking. According to the international experience, asset securitization causes the fact that investors cannot understand debtors’real property status, because it reconstructs the basic asset cash flow, lengthen the credit chain and aggravate the information asymmetry. Due to the loss regulation system and numerous participators, it can also lead to the ethical risk, cause the potential hazard and threaten the economic safety.Generally speaking, the fundamental risk of asset securitization is underlying asset risk. This paper starts to study the underlying asset risk of asset securitization. It analyzes the situation of underlying asset in China and USA and the characteristic and tendency of China’s market in the first part. It then discusses the conductive and transferred function of underlying asset risk in the process of asset securitization, where another risks like over-leverage, rating risk and implicit deposit guarantee come into being and will be transferred to the investors in financial market at last. It inspects the American subprime crisis and finds that the risk of asset securitization will be realized and results in the huge loss to investment bank, hedge fund, retirement pension, insurance company and even sovereign wealth funds when the risk increases, liquidity deflates and the default rate of subprime loan and interest rate climb up. In the final part, it analyzes the difference of asset securitization between China and America, summarizes the characteristics and put forward the advice to China’s financial market.