What is asset securitization? What are the characteristics, causes and effects of asset securitization

A: Asset securitization is a form of financing in which tradable securities are issued backed by a specific portfolio of assets or specific cash flows.

There are three main features of asset securitization.

1, asset securitization is asset-backed financing

bank loans, the issuance of securities and other traditional financing methods, the financier is its overall credit as a repayment basis through the asset securitization backed securities of the source of reimbursement is mainly based on the cash flow generated by the underlying assets, and has nothing to do with the sponsor's overall credit.

2, asset securitization is structured financing

Asset securitization as a structured financing, mainly reflected in the following aspects.

First, the establishment of a specialized agency SPV for asset securitization.

Second, the transfer of assets for "real sale".

Third, the reorganization of the cash of the underlying assets.

3, asset securitization is off-balance sheet financing

In the process of asset securitization financing, the transfer of assets and the cash proceeds, included in the left side of the balance sheet - "assets" column. As a result of the transfer of assets from the true sale, the underlying assets are removed from the left side of the sponsor's balance sheet in the "Assets" column. This is different from creditor financing such as loans from banks and bond issuance, which correspondingly increases the upper right corner of the balance sheet - the "Liabilities" column; and different from equity financing such as through the issuance of shares, which correspondingly increases the lower right corner of the balance sheet - the "Owners' Equity" column. --The "Owners' Equity" column.

Securitization is an off-balance sheet financing method and does not increase the size of the financier's balance sheet.

Asset securitization for banks can credit enhancement, eliminate excessive concentration of credit to transfer financial risk, reflect economies of scale to fully utilize the value of assets, provide liquidity, and improve capital ratios.

Asset securitization has obvious significance of financial innovation: transfer of credit risk innovation, improve liquidity innovation, credit creation innovation. It has obvious revelation significance to the reform of China's banking industry