| Asset securitization is recognized as one of the greatest financial innovation since the 70's in the 20th century. It has played an important role for the prosperity of the financial markets, as it provided a good financing and investment channel for financiers, investors, and intermediary service organizations. Asset securitization is not only beneficial to lenders that pursue risk diversification and to those who aim at accelerating the capital turnover rate, but also provides investors with new financial products. By the end of 2006, the size of U.S. asset securitization market had reached 8.6 trillion dollars, which was about twice of the size of the bond market in the same period. However, many problems were hidden behind the prosperous scenery. In April 2007, the sub-prime crisis broke out with the symbol of bankruptcy of New Century Financial Ltd. Till early 2009 the sub-prime crisis has caused great shock to the global economy. At the same time, China's total asset securitization products reached 66.7 billion. The founders include eight commercial banks, two asset management companies, and an automotive financial services company. It is full of significance to discuss how to make full use of asset securitization's function in promoting economic development while protecting the legitimate interests of investors and minimizing even avoiding the loss brought to investors,There is necessity for theorists and practitioners to pay attention to the interests of investors in asset Securitization. This article is based on this purpose and conducted from perspectives including institutional arrangements, intermediary services, and financial supervision to inspect loopholes in the existing mechanisms. Through the principles, risk, and other issues of asset securitization, every part of asset securitization is examined so can the key links and general links be clearly understood. The true sale, bankruptcy remoteness, underlying assets, credit assessment and management of government regulation should be adjusted to protect investors. The final aim is to analyze the defect of asset securitization and the successful experiences in china's asset securitization practice, and then how to reform the securitization of domestic assets for investors is pointed out.Difficulties of this paper are below:Because of the sub-prime crisis, the related theories develop continuously and relative research data is hard to collect, so I have to constantly look for the relevant theoretical research as a supplement. When comparing domestic asset securitization with its abroad counterpart, it is not easy to build a suitable way of reformation about china's asset securitization. Most data lack of access to reach, so it brought difficulty to my study. However, with hard effort, all of these difficulties are conquered.The logical structure of this paper:The entry point is the U.S. sub-prime crisis. The purpose is to analyze asset securitization and investor protection. Through the analysis of risk in asset securitization which investors are faced with, I find out the critical links and general links of investor protection. Finally, this paper gives advice on how to reform the asset securitization to better protect investors. |
