Did Securitization of Mortgage Loans Create Moral Hazards? A Study Based on the Experience of US and Malaysia
Securitization is considered as one of the most important financial development in recent history. It offer the benefits of improving returns on capital, lowering borrowing costs, diversifying risks, increasing secondary market liquidity and increasing availability of credit for mortgage borrowers....
| Main Author: | |
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| Format: | Dissertation (University of Nottingham only) |
| Language: | English |
| Published: |
2009
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| Online Access: | https://eprints.nottingham.ac.uk/22977/ |
| _version_ | 1848792487049560064 |
|---|---|
| author | Mohd Pilus, Fairuzana |
| author_facet | Mohd Pilus, Fairuzana |
| author_sort | Mohd Pilus, Fairuzana |
| building | Nottingham Research Data Repository |
| collection | Online Access |
| description | Securitization is considered as one of the most important financial development in recent history. It offer the benefits of improving returns on capital, lowering borrowing
costs, diversifying risks, increasing secondary market liquidity and increasing availability of credit for mortgage borrowers.
However, many parties blamed the moral hazards in the securitization of mortgage loans as the key factor contributing to the recent US financial crisis of 2007 - 2008. To investigate the claim, we used the case studies of securitization of mortgage loans in US as our base and compare it with the experience of Malaysia.
Premised on the literature review findings and the results of the case studies, we find supports that securitization of mortgage loans did create moral hazards and could not
find evidence that proves otherwise.
We conclude that securitization of mortgage loans did create moral hazards. However, the level of moral hazards experienced by the US and Malaysia differ. The differences were attributed to, amongst others, the strength of the underwriting standards, the complexities of securities and the strength of regulations in the two countries. We also conclude that the present of moral hazards did not preclude the fact that securitization provides benefits to the players and the economy, particularly when developed in the context of well-aligned incentives and oversight. |
| first_indexed | 2025-11-14T18:45:11Z |
| format | Dissertation (University of Nottingham only) |
| id | nottingham-22977 |
| institution | University of Nottingham Malaysia Campus |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-14T18:45:11Z |
| publishDate | 2009 |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | nottingham-229772018-01-18T09:05:25Z https://eprints.nottingham.ac.uk/22977/ Did Securitization of Mortgage Loans Create Moral Hazards? A Study Based on the Experience of US and Malaysia Mohd Pilus, Fairuzana Securitization is considered as one of the most important financial development in recent history. It offer the benefits of improving returns on capital, lowering borrowing costs, diversifying risks, increasing secondary market liquidity and increasing availability of credit for mortgage borrowers. However, many parties blamed the moral hazards in the securitization of mortgage loans as the key factor contributing to the recent US financial crisis of 2007 - 2008. To investigate the claim, we used the case studies of securitization of mortgage loans in US as our base and compare it with the experience of Malaysia. Premised on the literature review findings and the results of the case studies, we find supports that securitization of mortgage loans did create moral hazards and could not find evidence that proves otherwise. We conclude that securitization of mortgage loans did create moral hazards. However, the level of moral hazards experienced by the US and Malaysia differ. The differences were attributed to, amongst others, the strength of the underwriting standards, the complexities of securities and the strength of regulations in the two countries. We also conclude that the present of moral hazards did not preclude the fact that securitization provides benefits to the players and the economy, particularly when developed in the context of well-aligned incentives and oversight. 2009-12-09 Dissertation (University of Nottingham only) NonPeerReviewed application/pdf en https://eprints.nottingham.ac.uk/22977/1/09MBAlixfm2.pdf Mohd Pilus, Fairuzana (2009) Did Securitization of Mortgage Loans Create Moral Hazards? A Study Based on the Experience of US and Malaysia. [Dissertation (University of Nottingham only)] (Unpublished) |
| spellingShingle | Mohd Pilus, Fairuzana Did Securitization of Mortgage Loans Create Moral Hazards? A Study Based on the Experience of US and Malaysia |
| title | Did Securitization of Mortgage Loans Create Moral Hazards?
A Study Based on the Experience of US and Malaysia |
| title_full | Did Securitization of Mortgage Loans Create Moral Hazards?
A Study Based on the Experience of US and Malaysia |
| title_fullStr | Did Securitization of Mortgage Loans Create Moral Hazards?
A Study Based on the Experience of US and Malaysia |
| title_full_unstemmed | Did Securitization of Mortgage Loans Create Moral Hazards?
A Study Based on the Experience of US and Malaysia |
| title_short | Did Securitization of Mortgage Loans Create Moral Hazards?
A Study Based on the Experience of US and Malaysia |
| title_sort | did securitization of mortgage loans create moral hazards?
a study based on the experience of us and malaysia |
| url | https://eprints.nottingham.ac.uk/22977/ |