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Security design in the real world: why are securitization issues tranched?

Abstract:

Securitisations usually involve creating multiple tranches of a single issue with different characteristics, placed on the market as separate securities. Various theoretical explanations have been advanced to explain such tranching. This paper provides the first systematic testing of such theories using a proprietary database of over 5000 separate tranches in European securitisations raising a total of $1 trillion. We find support for asymmetric information and market segmentation explanation...

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Publication status:
Published

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Publisher:
University of Oxford Publisher's website
Series:
Department of Economics Discussion Paper Series
Publication date:
2005-03-01
Paper number:
225
Keywords:
Pubs id:
1003933
Local pid:
pubs:1003933
Deposit date:
2020-12-14

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