Studies On The Financial Effect Of Assets Backed Securitization And The Adaptive Mechanism

Analyzing and revealing the financial effect of assets backed securitization is the logical starting point for this paper. The financial effect of assets backed Securitization refers to the impact exerted by the participator of the asset backed securitization making use of financial resources effectively through the financial engineering.Securitization of financial assets can be divided into effect of micro-finance, and macro-finance, and effects of financial ecosystem.After nearly 40 years of development, asset securitization has become the largest investment in the bond market variety, and has been adopted by most countries in the world exerting great influence on all aspects of the financial sector. Despite the large number of academic articles on asset securitization, there are few articles dealing with the securitization of financial assets in a comprehensive way. It is a breakthrough to do research from the angle of optimizing financial ecological circle--especially in our country, it is more significant in practice than in theory.At present, there are major systemic deficiencies in China's financial ecological circle: the imbalance of capital market structure-there are more stocks than bonds, more national bonds than corporate bonds; the widening of the difference between savings and deposits in commercial banks and difficulty in corporate financing; short term savings and long term loans in commercial banks and long term savings and short term loans of insurance fund.Faced with the full liberalization of the financial sector, the Construction Bank of China and China Development Bank will issue Jianyuan Kaiyuan 2005-1 and 2005-1 MBS ABS asset securitization products in 2005. This shows that our country's implementation of asset securitization is more urgent.Asset Securitization can optimize the financial ecosystem; promote the financial efficiency, optimize financial structure, deepen the financial market, make financial innovation and stabilize financial circle. This paper, focusing on these points, makes normative and empirical research from both the theoretical and the practical perspective.On the one hand, asset securitization can be reduced and dispersed by the accumulation of financial institutions; new financial risks, on the other hand, will also occur. The former phenomenon is analyzed mainly in light of financial risk faced by China's commercial banking institutions; the latter problem is analyzed combined with Subordinated Debt crisis in the United States.After giving a clear idea of the financial asset securitization effects, this paper focuses on how to strengthen the positive financial effect and to prevent the negative financial effects through adaptive mechanisms. The paper is divided into six chapters as follows:Chapter I: Introduction. This chapter introduces the research significance of topics based on the current situation at home and abroad, research ideas and research methods, as well as major innovation and weaknesses. It can offer an overall view of the paper.Chapter II. In this chapter, the trend of asset securitization is illustrated through the meaning, the development features, the basic pattern and the motives of asset securitization. Asset Securitization has a broad sense and a narrow one. The connotation of asset securitization tends to become narrower while its extended meaning is increasingly broadening.Originating from the United States, asset securitization was then spread to Europe from where it was spread to Asia, Latin America and elsewhere. These regions inherited the characteristics of asset securitization of the U.S with new elements added. Therefore, four basic models of asset securitization were formed around the world, namely, the American model, the German model, Canada and Australia model.In spite of the gradual convergence of asset securitization development, the development motives have become increasingly diversified including expanding financing channels, reducing financial risks, cutting down financing costs and increasing revenue of the financial bodies, and so on. This paper generalized them as seven reasons.The third chapter discusses the financial effects of optimizing the ecological circle by asset securitization from three respects. First, financial effect of asset securitization on China's banking industry is illustrated in light of the actual situation of China's banking sector, which is also the necessary condition for asset securitization in China. Second, it is pointed out that the securitization of assets is favorable to the building of financial markets.Financial market is an important component of the financial ecosystem. The financial ecological circle is sometimes made up of numerous financial markets of different sizes, and sometimes a single financial market constitutes a financial ecosystem. In other words, financial ecosystem is financial market, and the optimization of financial ecosystem is the deepening of the financial markets. Finally, a virtuous cycle of the financial system is forged through the interaction and mutual influence between the main bodies of financial ecosystem and those of financial markets.Chapter IV deals with the four macro financial effects of asset securitization from the theoretical angle through normative research and qualitative analysis: reducing financial risks, enhancing financial stability, promoting financial innovation, optimizing financial structure and enhancing financial efficiency.In Chapter V, an index system is first constructed of optimizing financial ecological system. Then the relevant indicators are analyzed empirically. The empirical analysis of the financial effect of the main bodies of micro-finance is carried out through quantitative analysis and measurement of the sponsors, issuers, and such micro main bodies as SPV and intermediaries, which shows that asset securitization can reduce costs, reduce risk and increase the financial return.The empirical analysis of macro-financial effect of asset securitization is carried out mainly through regression analysis of the data of the United States to prove that asset securitization will change the financial market interest rates and interest rate term structure as well as strengthening or weakening the effect of macro-control.Chapter VI concerns the mechanism—the innovation and choice of the varieties of bonds, the bond risk, risk and risk control of SPV two aspects of. These mechanisms can strengthen positive effect of asset securitization, while weaken the negative effect of asset securitization. Finally, it is demonstrated that negative effects are likely to occur by analyzing the Subordinated Debt crisis in the United States.