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The rise of China's securitization market

Author

Listed:
  • Ya Tang
  • Daixi Chen
  • Jing Chen
  • Jianguo Xu

Abstract

We study the development of asset securitization markets in China. We manually collect all asset securitization projects and securities data from 2005 to 2015. Inspection of this sample combined with related policy changes reveals distinct characteristics and some potential problems. At the macro level, asset securitization market in China is policy driven, regulation‐segmented, and highly illiquid. At the micro level, the underlying assets are mainly corporate loans or assets, rather than mortgage or consumption loans as in the US and European markets. State owned commercial banks and enterprises enjoy significantly lower interest rates when issuing securitization bonds. Finally, risk‐isolation and credit enhancing techniques significantly improve the rating of asset‐backed securities.

Suggested Citation

  • Ya Tang & Daixi Chen & Jing Chen & Jianguo Xu, 2017. "The rise of China's securitization market," Financial Markets, Institutions & Instruments, John Wiley & Sons, vol. 26(5), pages 279-294, December.
    • Handle: RePEc:wly:finmar:v:26:y:2017:i:5:p:279-294
    DOI: 10.1111/fmii.12090
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    References listed on IDEAS

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    1. Gary B. Gorton & Nicholas S. Souleles, 2007. "Special Purpose Vehicles and Securitization," NBER Chapters, in: The Risks of Financial Institutions, pages 549-597, National Bureau of Economic Research, Inc.
    2. Peter M. DeMarzo, 2005. "The Pooling and Tranching of Securities: A Model of Informed Intermediation," The Review of Financial Studies, Society for Financial Studies, vol. 18(1), pages 1-35.
    3. Darrell Duffie, 2008. "Innovations in credit risk transfer: implications for financial stability," BIS Working Papers 255, Bank for International Settlements.
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    Cited by:

    1. Ronghui Pang & Yanan Zhang & Jianbiao Li & Shaopeng Xie, 2024. "Can asset‐backed securitisation reduce corporate leverage? Evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 64(4), pages 3337-3359, December.

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