research has hypothesized that these cutoff rules result from a securitization rule of thumb. Under this theory, an observed … securitization rule-of-thumb theory but consistent with the origination rule-of-thumb theory. There are jumps in the number of loans … jump in defaults at the cutoff would imply that securitization led to lax screening. We argue instead that originators …

Securitization is one of the most important innovations in financial markets. It is a process of converting illiquid …. As a result, securitization improves liquidity in capital markets by allowing originators to remove the issued loans from …, securitization is often suspected of being one of the main reasons for the recent financial crisis. One concern that is frequently …

Securitization allows the recycling of scarce bank capital but exacerbates the moral hazard problem inherent in banks …' private choices of loan monitoring. In a model combining these aspects of the securitization market, I show that an …