Mortgage Securitization in Asia

• Main Authors: Mariano, Roberto S., Green, S., Pavlov, Andrey, Wachter, Susan M.
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2007
• Subjects: Asian Studies; Finance
• Online Access: https://ink.library.smu.edu.sg/soe_research/979
• Institution: Singapore Management University

Green and his co-authors provide a conceptual basis for the price discovery potential of tradable market instruments and, specifically, for the development of mortgage securitization in Asia. Securitization in Asia, they argue, is particularly important because of its potential role in increasing the transparency of the financial sector of Asian economies. The authors put forth a model explaining how misaligned incentives can lead to bank generated real estate crashes and to macroeconomic instability. They examine the banking sector's performance in Asia compared to securitized real estate returns, in order to provide evidence on the contribution of misaligned incentives. They discuss how the addition of mortgage-backed securities (MBS) helps to inoculate markets from the shocks arising from bank-financed mortgage lending. They conclude with a brief discussion of current MBS markets in Asia.