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Economi versus Regulatory Capital
Economi versus Regulatory Capital

... Many banks choose a capital level that is substantially higher than the regulatory minimum for purely commercial reasons, e.g. in order to obtain a higher rating, as this makes capital market funding cheaper, or to avoid downgrading for reputational reasons. Some argue that financial firms do not di ...
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... with the exception of a long-term trend among many institutions to shift an increasing portion of their portfolios to illiquid assets. Indeed, for most pension and SWF boards, the review of assetallocation decisions has been more or less a rubber-stamping exercise. Instead of working on the SAA, man ...
Mutual Fund Flows and Fluctuations in Credit and Business Cycles
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... We start with investigating whether HYNEIO can predict variables that were found to be indicators for the credit cycle. We focus on Greenwood and Hanson’s (2013) high-yield-share (HYS), which measures the quality of corporate bond issuers, and the degrees of reaching for yield (Baker and Ivashina, 2 ...
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... intermediate bond fund pool. “The entire institutional chunk will move into direct plan once it is launched. They cannot be blamed as institutions are bound by certain corporate governance norm which mandates them to invest surpluses at lower cost,” said Dhirendra Kumar, MD of fund research firm Val ...
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FREE Sample Here
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... Information reported in ARF 720.4 is required primarily for purposes of the ABS and the RBA. Items on ARF 720.4 are required for various purposes, including the compilation of Australia’s National Accounts and the calculation of the monetary and credit aggregates. Information reported in ARF 720.4 m ...
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Securitization

Securitization is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations (or other non-debt assets which generate receivables) and selling their related cash flows to third party investors as securities, which may be described as bonds, pass-through securities, or collateralized debt obligations (CDOs). Investors are repaid from the principal and interest cash flows collected from the underlying debt and redistributed through the capital structure of the new financing. Securities backed by mortgage receivables are called mortgage-backed securities (MBS), while those backed by other types of receivables are asset-backed securities (ABS).Critics have suggested that the complexity inherent in securitization can limit investors' ability to monitor risk, and that competitive securitization markets with multiple securitizers may be particularly prone to sharp declines in underwriting standards. Private, competitive mortgage securitization is believed to have played an important role in the U.S. subprime mortgage crisis.In addition, off-balance sheet treatment for securitizations coupled with guarantees from the issuer can hide the extent of leverage of the securitizing firm, thereby facilitating risky capital structures and leading to an under-pricing of credit risk. Off-balance sheet securitizations are believed to have played a large role in the high leverage level of U.S. financial institutions before the financial crisis, and the need for bailouts.The granularity of pools of securitized assets can mitigate the credit risk of individual borrowers. Unlike general corporate debt, the credit quality of securitized debt is non-stationary due to changes in volatility that are time- and structure-dependent. If the transaction is properly structured and the pool performs as expected, the credit risk of all tranches of structured debt improves; if improperly structured, the affected tranches may experience dramatic credit deterioration and loss.Securitization has evolved from its beginnings in the late 18th century to an estimated outstanding of $10.24 trillion in the United States and $2.25 trillion in Europe as of the 2nd quarter of 2008. In 2007, ABS issuance amounted to $3.455 trillion in the US and $652 billion in Europe. WBS (Whole Business Securitization) arrangements first appeared in the United Kingdom in the 1990s, and became common in various Commonwealth legal systems where senior creditors of an insolvent business effectively gain the right to control the company.
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