Analysis On The Practice Of Mortgage-backed Securitization In China

It has been already ten years since Residential Mortgage-backed Securitization begins to develop in China, but the size of the its expansion is still limitted. Compared with the United States and other mature financial markets, whose securitization rate of residential mortgage loan is approaching 70%, there is still a long way to go for MBS in China. In the context of interest rates liberalization, demographic dividend being cashed out and multiple favorable policies, more and more commercial banks has participated in assets securitization business since 2014, in order to revitalize stock assets, reduce liquidity risk and transform the business.The case this paper studies is the MBS that China Merchants Bank issued in 2015. It was the second MBS since 2012 when asset securitization restarted in China and also the first MBS after the implementation of filing system in 2014. So this project is of great reference value for other commercial banks to develop their MBS business.Based on the literature and theories relevant to Asset-Securitization, this paper introduces the development of asset securitization and the exploration of MBS in our country. Around the case, this paper also analyses Credit Assets Securitization and MBS in perspective of both project sponsor and investors.By means of chart analysis, comparative analysis and event study for the case, we found that the project has the advantages of high quality underlying assets, integrated structure of deal and low investment risk for prior securities. However it also has some disadvantages that weaken the willingness of commercial banks to launch MBS, such as MBS can not significantly enhance the financial indicators and market value of China Merchants Bank in the short run. In addition, the illiquidity of secondary market and lack of systematic laws for China’s asset securitization also influence the enthusiasm of banks to develop securitization business.In order to solve those problems above and deepen the development of MBS in China, this paper provides solutions and advices including construction of China’s personal credit system, promotion the secondary market of asset securitization, improving the MBS pricing mechanism and selection of appropriate basic assets pool and credit promotion measures.