A Primer on Structured Finance

Abstract

Regulatory concerns about the impact of structured claims on financial stability in times of stress are frequently too sweeping and indistinct for a judicious assessment of how structured finance transactions might propagate asset shocks across different capital market segments. This brief chapter defines structured finance in order to inform a more specific debate about possible regulatory challenges posed by complex forms of credit risk transfer.

Note: Parts of the article were previously published in "What is Structured Finance?," Securitization Conduit, Vol. 8, 2005/6.

Keywords: structured finance, credit risk transfer, asset-backed securitization (ABS), securitization, mortgage-backed securitization (MBS), collateralized debt obligation (CDO), credit default swap (CDS)

JEL Classification: D81, G15, M20