Why do banks choose to securitise their assets? Explain how securitisation may exacerbate the asymmetric information problems in the financial markets. Discuss the role of mortgage-backed securities in the financial crisis of 2007-2008

Why do banks choose to securitise their assets? Explain how securitisation may exacerbate the asymmetric information problems in the financial markets. Discuss the role of mortgage-backed securities in the financial crisis of 2007-2008

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter14: The Financial Crisis And The Great Recessio

Section: Chapter Questions

Problem 3DQ

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What is securitisation? Explain briefly the securitisation process and the reasons why
banks choose to securitise their assets. Discuss the role of mortgage-backed securities in
the financial crisis of 2007-2008.

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