This paper provides an insight into the key informational frictions that arise in the process of securitization. Study has been done to understand the reasons of Liquidity crisis and examining the reasons behind subprime lending. We continue with a complete picture of the subprime borrower and the subprirne loan along with the concept of predatory borrowing and predatory lending. Securitization enables credit expansion through higher leverage of the financial system as a whole. Securitization may create financial instability if the imperative to expand assets drives down lending standards. This paper attempts to address the implications for financial stability arising from securitization after the global financial crisis. We have drawn the example of a mortgage pool securitized by Countrywide Financial from 2005 to 2008 to understand the role of securitization in global financial crisis.
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