First, it may lead to a better risk allocation as it disconnects the originator of a risky asset from the ultimate risk taker. Second, referring to a result of the model by Hakenes and Schnabel presented at this conference, better risk allocation provides scope for socially beneficial projects that, otherwise, would not have been financed.
Finally, as the Basel Committee on Banking Supervision points out in The Joint Forum on Credit Risk Transfer (2008), “CRT has made the market pricing of credit risk more liquid and transparent”.