Fixed Income I
Reading 45. Introduction to Asset-Backed Securities
Learning Outcome Statements
a. explain benefits of securitization for economies and financial markets;
CFA Curriculum, 2020, Volume 5
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Subject 1. Benefits of Securitization for Economies and Financial Markets
Securitization has several benefits:
- Investors can have direct access to mortgages and portfolios of receivable that would be unattainable if all the financing were performed through banks.
- Banks can remove assets from their balance sheets, therefore increasing the pool of available capital that can be loaned out.
- Borrowers can pay lower costs when borrowing.
The end result is lower cost and risk, more liquidity, and improved economic efficiency.