Securitisation and Financial Stability

@article{Shin2009SecuritisationAF,
  title={Securitisation and Financial Stability},
  author={Hyun Song Shin},
  journal={Monetary Economics},
  year={2009}
}
  • H. Shin
  • Published 1 March 2009
  • Economics
  • Monetary Economics
A widespread opinion before the credit crisis of 2007/8 was that securitisation enhances financial stability by dispersing credit risk. After the credit crisis, securitisation was blamed for allowing the ‘hot potato’ of bad loans to be passed to unsuspecting investors. Both views miss the endogeneity of credit supply. Securitisation enables credit expansion through higher leverage of the financial system as a whole. Securitisation by itself may not enhance financial stability if the imperative… 
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