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Regulating synthetic securitisation following the global financial crisis

journal contribution
posted on 01.03.2012, 00:00 authored by Edward PodolskiEdward Podolski
This article explores whether proposed changes to the regulation of synthetic securitisation in Australia are sufficient in light of the Global Financial Crisis. Synthetic securitisation is specifically chosen as an object of study, given the relative ease with which it can be over-used. The article examines several theoretical problems with securitisation, which entice corporations into excessively risky behaviour. Contrary to popular belief, it is established that agency issues are not a serious problem with securitisation. Instead, managerial behavioural biases are shown to be most problematic. The article recommends stricter capital adequacy relief requirements, which would provide a disincentive for excessive risk-taking by potentially over-confident managers.

History

Journal

Australian economic review

Volume

45

Issue

1

Pagination

14 - 28

Publisher

Wiley

Location

Chichester, Eng.

ISSN

0004-9018

eISSN

1467-8462

Language

eng

Publication classification

C1.1 Refereed article in a scholarly journal; C Journal article

Copyright notice

2012, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research

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