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Overdependence on Credit Ratings Was a Primary Cause of the Crisis
Partnoy, Frank - Fondazione ENI Enrico Mattei (FEEM) - 2009
The first part of the paper describes how over time credit rating agencies ceased to play the role of information intermediaries. Rating agencies did not provide information about the risk associated with the securitized instruments, but they simply enabled structurers to create and maintain...
Persistent link: https://www.econbiz.de/10005008031
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Understanding the securitization of subprime mortgage credit
Ashcraft, Adam B.; Schuermann, Til - 2008
In this paper, we provide an overview of the subprime mortgage securitization process and the seven key informational … predatory borrowing and predatory lending. We present the key structural features of a typical subprime securitization, document …
Persistent link: https://www.econbiz.de/10010283528
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The impact of securitization on the expansion of subprime credit
Nadauld, Taylor D.; Sherlund, Shane M. - In: Journal of Financial Economics 107 (2013) 2, pp. 454-476
This paper investigates the relationship between securitization activity and the extension of subprime credit. The … the years 2003 and 2005. Second, the securitization of subprime loans increased substantially over the same time period … securitization activity of investment banks was driven by forces exogenous to factors impacting lending decisions in the primary …
Persistent link: https://www.econbiz.de/10010616821
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Rating agencies and information efficiency : do multiple credit ratings pay off? ; [the case of RMBS rating migration]
Morkoetter, Stefan; Stebler, Roman; Westerfeld, Simone - 2015
We empirically investigate the benefits of multiple ratings not only at issuance of debt instruments but also during the subsequent monitoring phase. Using a record of monthly credit rating migration data on all U.S. residential mortgage-backed securities rated by Standard & Poor's, Moody's, and...
Persistent link: https://www.econbiz.de/10011343380
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Lessons from the 2007 Financial Crisis
Buiter, Willem H. - C.E.P.R. Discussion Papers - 2007
The paper studies the causes of the current financial crisis and considers proposals for mitigation and prevention of future crises. The crisis is was the product of a ‘perfect storm’ bringing together a number of microeconomic and macroeconomic pathologies. Among the microeconomic systemic...
Persistent link: https://www.econbiz.de/10005791213
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On democratizing financial turmoil: a Minskian analysis of the subprime crisis
Fernandez, Luisa; Kaboub, Fadhel; Todorova, Zdravka - 2008
The paper uses Minsky's financial instability hypothesis as an analytical framework for understanding the subprime mortgage crisis and for introducing adequate reforms to restore economic stability. We argue that the subprime crisis has structural origins that extend far beyond the housing and...
Persistent link: https://www.econbiz.de/10010266547
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Subprime mortgages and the MBSs in generating and transmitting the global financial crisis
Jurek, Michal; Marszalek, Pawel - Financialisation, Economy, Society & Sustainable … - 2014
The paper addresses numerous factors which generated and transmitted the 2007-2009 financial crisis, with the special attention paid to phenomena observed in the subprime mortgages and MBSs markets. The aim of the paper is to provide a critical survey which systematically examine the literature...
Persistent link: https://www.econbiz.de/10010933416
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Preventing the Next Great Meltdown
Levine, David - In: Journal of Financial Transformation 30 (2010), pp. 95-104
The regulatory framework established during the Great Depression was dismantled in stages after 1969. The deregulation of deposits at banks and savings institutions created incentives to widen the scope of investments that banks and thrifts could make. Novel instruments were created that should...
Persistent link: https://www.econbiz.de/10008751495
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The power of opinion: More evidence of a GIPS-markup in sovereign ratings during the euro crisis
Nauhaus, Steffen - 2015
This paper examines whether the Big Three credit rating agencies actually played as active a role in the Euro Crisis as previously asserted. On the basis of panel data methods for a set of 11 EMU countries, the analysis reveals significant evidence for an arbitrary markup on the GIPS group of...
Persistent link: https://www.econbiz.de/10011319153
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Two-sided Certification: The market for Rating Agencies
Fasten, Erik R.; Hofmann, Dirk - 2010
Certifiers contribute to the sound functioning of markets by reducing a symmetric information. They, however, have been heavily criticized during the 2008-09 financial crisis. This paper investigates on which side of the market a monopolistic profit-maximizing certifier offers his service. If...
Persistent link: https://www.econbiz.de/10010334122