The Enlightenment From The Experience Of Asset Securitization Market In The US

Asset securitization originating from the United States is the financial innovation utilized widely in global financial market, it could create negotiable securities based on these financial assets that are of low liquidity but able to bring stable cash inflow, which would help financial institutions to transfer the risks attached to financial assets and supply additional liquidity, as well as provide new thoughts for the development of financial market. These distinctive features made the use of asset securitization expand from real estate financial market to many other areas in financial market, and be accepted by many countries. However, the new mode of operation from asset securitization also brought new risks to the financial market, the overuse of financial innovation and the lag in financial supervision weakened the motivation of prudent operation by many financial institutions and caused accumulation of systemic risks, leaving the financial market more vulnerable before significant changes of macroeconomic environment.Asset securitization is originated from the United States, which, also owns the most developed asset securitization market in the world. Although the breakout of the subprime mortgage crisis in 2007 brought much negative effects to the economy of not only the United States but also all the world, it is the deep-seated reasons in the financial market of the United States, rather than asset securitization, that are to blame. The asset securitization market of the United States had entered the new stage of development with some adjustments after the subprime mortgage crisis, instead of disappearing or falling into stagnates. This paper would review the motivations that led to the establishment of the asset securitization market in the United States and its different stages through theoretical analysis and some necessary data, and focus on the conditions of asset securitization market of the United States before and after the subprime mortgage crisis, including the problems exposed in the crisis, the adjustments in the asset securitization market after the crisis, and the empirical analysis of the role asset securitization plays in the financial market of the United States.China started the pilots on asset securitization in 2005, ceased it in 2008 because of the subprime mortgage crisis, and restarted the pilot in 2012. The development of asset securitization in China had accelerated after 2012, which reflected the increasing attention from commercial banks in China as some changes in financial market, including the building of multi-level capital market, marketization of interest rate, and the slowing-down economic growth, would leave the source of profits based on interest difference unmaintainable, However, the asset securitization market in China is in its initial stage, with some problems waiting to be solved. It would be of great significance to learn lessons from the research work on the asset securitization market of the United States, and put forward suggestions on the strategies to develop the asset securitization market in China.This paper consists of five parts. The first chapter is the introduction that includes the background and the sense of the research, findings of the research before, and the innovation as well as the deficiency in this article. The second chapter is the illustration of theories on asset securitization that includes the definition, distinctive features, mode of operation, and the Importance of asset securitization for the financial market in China. The third chapter is the research on the asset securitization market of the United States that includes the motivations in the establishment of the asset securitization market of the United States and its different stages, and focuses on the period before and after the subprime mortgage crisis, including the problems exposed in the crisis, the adjustments in the asset securitization market after the crisis, and the empirical analysis in the functions of asset securitization. The forth chapter introduces the present situation of the asset securitization market in China, including the history and outlook of the asset securitization market in China. The fifth chapter is proposals of policy on the operation of commercial banks, the path of the development, laws and regulations, supervision system, and the construction of the market, based on the lessons from the asset securitization market of the United States.