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Zoology is a subject of study. It is not especially important to Islam. It is important for all.
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When structuring a special purpose vehicle securitization, key considerations include determining the assets to be securitized, establishing the legal structure of the SPV, ensuring compliance with regulatory requirements, assessing credit risk, and designing the cash flow mechanisms.
Securitization is a type of marketable preparation. It makes sure the securities in marketing that are readily available show the interests in an ownership.
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- Securitization changes the basic role of financial intermediaries. Traditionally, financial intermediaries have pooled funds from investors loaned to firms in their place. - Securitization has enabled firms to offer these functions in the form of a security, in which case, the focus shifts to the more essential function i.e. distributing a financial product. (For example, in the above case, the bank, being the earlier intermediary, was eliminated, and instead the services of an investment banker were sought to distribute a debenture issue.) - Securitization seeks to eliminate fund based financial intermediaries for fee based distributors. (In the above example, the bank was a fund based intermediary, a reservoir of funds, whereas the investment banker was a fee based intermediary, a catalyst, a pipeline of funds. Hence, with the increasing trend towards securitization, the role of fee based financial services has been brought into the focus.) - In case of a direct loan, the lending bank was performing several intermediation functions as noted above. It was distributor, in the sense that it raised its own finances from a large number of small investors. It was appraising and assessing the credit risks in extending the corporate loan, and having extended it, it was managing the same. - Securitization splits each of these intermediary functions apart, each to be performed by separate specialized agencies. The distribution function will be performed by the investment bank, appraisal function by a credit rating agency, and management function, possibly by a mutual fund which manages the portfolio of security investments by the investors. Hence, securitization replaces fund based services with several fee based services. This is mainly from http://www.citeman.com/5298-securitization-capital-markets-structured-financial-and-others/
Securitization involves pooling various financial assets, such as loans or mortgages, and converting them into tradable securities, which allows for risk dispersion and enhanced liquidity. Financial intermediaries, like banks and investment firms, play a crucial role in this process by facilitating the creation, structuring, and distribution of these securities. They assess the underlying assets, manage the associated risks, and provide investor access to diversified investment opportunities. Ultimately, securitization enables intermediaries to enhance capital efficiency and optimize the allocation of financial resources in the economy.
U. S. Sohoni has written: 'Securitization of assets' -- subject(s): Asset-backed financing
Securitization in Non-Banking Financial Companies (NBFCs) refers to the process of converting illiquid assets, such as loans or receivables, into marketable securities. This involves pooling various financial assets and creating securities backed by these assets, which can then be sold to investors. By doing so, NBFCs can improve liquidity, manage risk, and obtain capital for further lending activities. It also allows investors to gain exposure to a diversified portfolio of loans.
An example of securitization of assets is the creation of mortgage-backed securities (MBS). In this process, banks bundle together a pool of home mortgages and sell them as a single security to investors. The cash flows generated from the mortgage payments are then passed on to the investors, allowing banks to free up capital for new loans while providing investors with regular income. This practice helps distribute risk and enhances liquidity in financial markets.
Assets that are most amenable to the securitization process typically include those that generate predictable cash flows, such as mortgages, auto loans, credit card receivables, and student loans. These assets are often pooled together to create securities that can be sold to investors, providing liquidity to the originators. Additionally, the assets should have a relatively homogeneous risk profile and be easily valued, making them suitable for structuring into tradable financial instruments.
T. H. Donaldson has written: 'Credit risk and exposure in securitization and transactions' -- subject(s): Bank loans, Credit, Credit control, Risk management
Karin Svedberg Helgesson has written: 'Securitization, accountability and risk management' -- subject(s): Money laundering, Banks and banking, Asset-backed financing, Liability (Law)