Diversification of Risk Through Financial Innovation - Securitization
Diversification of Risk Through Financial Innovation - Securitization

Author(s): Blanka Kameníková, Eva Cipovová
Subject(s): Business Economy / Management, Financial Markets
Published by: Masarykova univerzita nakladatelství
Keywords: bank restructuring; the process of securitization; diversification of risk pooling; rating; tranche; financial innovation; SPV;
Summary/Abstract: The paper deals with one of the most important trends in world financial markets - securitization. This trend line has started to use already in 80th years of the twentieth century, but its popularity was given to the 21st century. Securitization is an important investment instrument of the companies, which reduce the importance of financing through traditional loans and it replaced by financing through securitization of commercial products in the capital markets. The advantage of using this tool for companies is to increase liquidity and risk diversification, on the other hand, this type of transactions requires strict legislative control. Aim of this paper is to explain the basic structure of the securitization process, regulatory measures, which have lead to a reduction in the risk and consequences that entails bringing in financial markets.

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