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regulatory reform. The analysis ascribes the crisis not only to problems in subprime mortgage lending and securitization, but … and securitization, focusing on problems of security design and governance, and lack of external discipline from rating … interplay of price declines in malfunctioning markets, fair value accounting, an insufficiency of bank equity, and regulation …
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This paper provides evidence for regulatory arbitrage within the class of assetbacked securities (ABS) based on individual asset holding data of German banks. I find that those banks operating with tight regulatory constraints pick the securities with the highest yield and lowest collateral...
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