the cost of increasing systemic risk. Later, a follow-up study showed that a particular strategy of securitization with … tranches can help avoid this trade-off. We extend the theoretical work on securitization by considering all possible strategies … for securitization with two tranches, by finding their corresponding optimal diversification solutions, and by discussing …

shadow banks in securitization markets. Exploiting the election of Donald Trump as an exogenous shock that reduces carbon … risk, we find that banks’ securitization decisions are sensitive to borrowers’ carbon footprints. Banks are more likely to … is reduced after Trump’s election. Importantly, securitization enables banks to offer lower interest rates to polluting …