Optimal Securitization with Moral Hazard ∗


This paper considers the optimal design of mortgage backed securities (MBS) in dynamic setting with moral hazard. A mortgage underwriter with limited liability can engage in costly effort to screen for low risk borrowers and can sell loans to a secondary market. Secondary market investors cannot observe the effort of the mortgage underwriter, but they can… (More)

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Citations per Year

Citation Velocity: 5

Averaging 5 citations per year over the last 3 years.

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