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This paper builds on recent research by Fender and Mitchell (2009) who show that if financial institutions securitize loans, retaining an interest in the equity tranche does not always induce the securitizer to diligently screen borrowers ex ante. We first determine the conditions under which this scenario becomes binding and further illustrate the implications for capital requirements. We then propose an extension to the existing model and also solve for optimal retention size. This also allows us to capture feedback effects from capital requirements into the maximization problem. Preliminary results show that equity tranche retention continues to best incentivize loan screening.
Asset-backed financing --- Securities --- Econometric models. --- Blue sky laws --- Capitalization (Finance) --- Investment securities --- Portfolio --- Scrip --- Securities law --- Underwriting --- Investments --- Investment banking --- Asset-backed securities --- Asset-based financing --- Asset securitization --- Securitization, Asset --- Corporations --- Covered bonds --- Law and legislation --- Finance --- Banks and Banking --- Finance: General --- Investments: Stocks --- Money and Monetary Policy --- Industries: Financial Services --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Financing Policy --- Financial Risk and Risk Management --- Capital and Ownership Structure --- Value of Firms --- Goodwill --- General Financial Markets: Government Policy and Regulation --- Investment & securities --- Monetary economics --- Financial services law & regulation --- Stocks --- Loans --- Credit --- Credit risk --- Financial sector stability --- Financial risk management --- Financial services industry --- United States
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Bank credit cards --- Consumer credit --- Negotiable instruments --- Payment --- Asset-backed financing --- Cartes bancaires --- Crédit à la consommation --- Effets de commerce --- Paiement --- Titrisation --- Law and legislation --- Droit --- AA / International- internationaal --- FR / France - Frankrijk --- 347.730 --- 347.740 --- 333.770 --- 333.745 --- Droit commercial --- BPB1010 --- Commercial law --- -Negotiable instruments --- -Asset-backed financing --- -346.0960944 --- Ed1fra --- Asset-backed securities --- Asset-based financing --- Asset securitization --- Securitization, Asset --- Corporations --- Covered bonds --- Bills and notes --- Bills of credit --- Commercial paper --- Credit, Bills of --- Credit, Titles of --- Instruments, Negotiable --- Negotiable notes --- Negotiable paper --- Titles of credit --- Choses in action --- Commercial documents --- Legal instruments --- Drafts --- Financial instruments --- Business --- Business law --- Commerce --- Law, Commercial --- Mercantile law --- Law --- Law merchant --- Maritime law --- Financiële instellingen: algemeen. --- Juridische instrumenten van het krediet: algemeenheden. --- Kredietinstrumenten: algemeenheden. --- effectisering. Titrisatie. --- Handelsrecht --- -Law and legislation --- -Finance --- -AA / International- internationaal --- Crédit à la consommation --- Finance --- prawo handlowe --- kauppaoikeus --- commercial law --- drept comercial --- diritto commerciale --- obchodní právo --- kereskedelmi jog --- obchodné právo --- dritt kummerċjali --- трговско право --- handelsrecht --- direito comercial --- äriõigus --- komercinė teisė --- търговско право --- e drejta tregtare --- komerctiesības --- Derecho mercantil --- трговинско право --- trgovačko pravo --- handelsret --- handelsrätt --- εμπορικό δίκαιο --- trgovinsko pravo --- комерцијално право --- kauppalainsäädäntö --- legjislacion tregtar --- стопанско право --- kereskedelmi törvénykönyv --- Handelsgesetzgebung --- handelswetgeving --- Derecho comercial --- legislación comercial --- legislazione commerciale --- legislação comercial --- législation commerciale --- trgovinsko zakonodavstvo --- Handelsgesetzbuch --- affärsrätt --- prekybos teisė --- kaubandusõigus --- obchodná legislatíva --- legislație comercială --- äriseadusandlus --- komercdarbības likumdošana --- εμπορική νομοθεσία --- commercial legislation --- prekybos įstatymai --- obchodní legislativa --- handelslovgivning --- Financiële instellingen: algemeen --- Juridische instrumenten van het krediet: algemeenheden --- Kredietinstrumenten: algemeenheden --- effectisering. Titrisatie --- dlí tráchtála --- -Bank credit cards --- -Commercial law
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