Financial Innovation, Structured Finance and Off Balance Sheet Financing: The Case of Securitisation

42 Pages Posted: 24 Jan 2011 Last revised: 8 Jun 2014

See all articles by Vincenzo Bavoso

Vincenzo Bavoso

The University of Manchester - School of Law

Date Written: January 1, 2010

Abstract

The paper seeks to investigate the use and role of securitisation as main structured finance tool, and to assess the legal pitfalls, if any, that underlie the arrangement of this financing technique. This is done firstly by looking at the legal development of securitisation and at the regulatory incentives that have more recently shaped the originate and distribute model; attention will then be drawn to the legal mechanisms that govern the structuring of the transaction, from its simplest form, to the more complex CDOs and CDSs. The paper also looks at the more practical role of securitisation within financial scandals – in particular in the context of the most recent banking collapses – by presenting the case of two institutions (Northern Rock and Lehman Brothers) which were affected by similar strategic choices as regards the over reliance on securitised products.

Keywords: Securitisation, financial innovation, structured finance, CDO, CDS

Suggested Citation

Bavoso, Vincenzo, Financial Innovation, Structured Finance and Off Balance Sheet Financing: The Case of Securitisation (January 1, 2010). Available at SSRN: https://ssrn.com/abstract=1746109 or http://dx.doi.org/10.2139/ssrn.1746109

Vincenzo Bavoso (Contact Author)

The University of Manchester - School of Law ( email )

Oxford Road
Manchester M13 9PL, M139PL
United Kingdom

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