Mortgage-Backed Securitization: The Obstacles And Policy Arrangement Of China

Asset-backed securitization (or asset securitization, AS) is one of the most important innovations and financial instruments on the capital market in the past thirty years. Mortgage-backed securitization (MS) is the original and main pattern of AS, and it is also the best one with which China can launch her AS.Now China Construction Bank is busy preparing China's first case of mortgage-backed securitization. In this dissertation, the development, the theoretical system, the steps of operation and the financing characteristics of AS were detailed overall firstly, and then its theoretical system was concluded as a central principle-the analysis of flowing fund and three basic principles-asset reform, bankruptcy remote and credit enhancement. And it was pointed out that AS is a new off-balanced financing instrument with low cost and a more advanced financing technique than direct financing.Then, the MS and the features of the mortgage-backed securities (MBS) of America, Canada, Hongkong and Austrilia were detailed and compared with each other, the differences and common aspects were pointed out. And with the consideration of China's conditions, it was shown that the primary and secondary mortgage markets were very small and poor developed, the laws and tax arrangements on MS and credit enhancement were far from developed, the institutional investors too weak to surpport the market of MBS. In one word, all of this has handicapped the development of MS and AS in China. The last part of the dissertation gives a series of policy suggestions according to the aforementioned obstacles, such as: An institution which can provide services of insurance and guarantte to the lender of mortgage should be founded to improve the development of the primary and secondary mortgage markets; Meanwhile, some laws should be enacted and some others should be revised; The tax arrangement and credit enhancement should be improved, and so on. It was also made clear that collateralized mortgage obligation should be chose as the first one of MBS in China for its remarkable characteristics compared with the other kinds of MBS.