This is a tool that bridges between the money that is held by the various entities and the credit consumers in the economy. Securitization allows the expansion of institutional investors’ investment horizons, and allows the freeing up of capital and the managing of duration in the banking system.
If there is one issue that the recent global financial crisis has driven home is the need for a better understanding of the products in our financial system, the levels of risk that are being assumed by various financial institutions, the investments strategies that are being adopted and the quality of information disclosure being provided to investors and the public at large.