In my view, this is a match that should happen in an efficient financial system, and securitisation of SME loans is the way to achieve it. What is more, the funds received by banks from transferring bundled SME loans to outside investors can help support new lending, also to SMEs, and in turn support further securitisation.
One might rightly ask whether SME ABSs are too risky to deserve a comeback. After all, memories of the US sub-prime mortgage crisis are still fresh in the minds of many market participants. As a result, the conventional wisdom is that securitisations pose financial stability risks and should be largely discouraged by regulators.