The financial crisis and securitization

Ewa Szabłowska

doi:10.15503/jecs20101.37.48

Abstract

Securitization means the change of non-liquid assets into securities. This topic has become more popular, mainly due to the U.S. subprime mortgage crisis. In this article, an analysis is given of the current situation in financial markets and the changes, which were implemented from the first days of subprime crisis. Also mentioned is the impact the crisis has had on securitization development. Part of the article is devoted to the situation on the Polish financial market. It is quite a new market and it is susceptible to such crises. The Article presents the part played by securitization in the Polish financial market and the circumstances for its growth in the near future. It also covers the latest information related to financial market regulations, which could have direct or indirect impact on the quantity and value of securitization transactions.

Highlights

Part of the article is devoted to the situation on the Polish financial market
The genesis of the subprime mortgage crisis When speaking about the genesis of the subprime mortgage crisis it is best to go back to the 1920`s
Market for subprime mortgages almost non-existent; lack of consumer bankruptcy act – it is in the U.S and in some European countries, it caused difficulties for banks to recover money from outstanding loans; debt of Polish society is still many times lower than in American society or in the population of Western Europe; Polish entities generally do not invest in U.S securities backed on subprime loans; bank credit portfolios are not financed through securitization

Summary

Introduction

Part of the article is devoted to the situation on the Polish financial market. It is quite a new market and it is susceptible to such crises. Banks forecast, that the upturn in the property market would not change in the coming years, and the real estate which secured loans would even gain more value.

Results

Conclusion