Project Management

Securitized Banking And The Run On Repo

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Executive Summary

The Panic of 2007-2008 was a run on the sale and repurchase market (the "Repo" market), which is a very large, short-term market that provides financing for a wide range of securitization activities and financial institutions. Repo transactions are collateralized, frequently with securitized bonds. The authors refer to the combination of securitization plus repo finance as "Securitized banking", and argue that these activities were at the nexus of the crisis. They use a novel data set that includes credit spreads for hundreds of securitized bonds to trace the path of crisis from subprime-housing related assets into markets that had no connection to housing.

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