Are there too many safe securities?
Subtitle: securitization and the incentives for information production
By: Samuel G. Hanson, Adi Sunderam
Contributors: Sunderam, Adi; Harvard Business School
Series: Working paper / Harvard Business School -- 12-037; Working paper (Harvard Business School) -- 12-037
Publisher: Harvard Business School
Published: 2011
Place of publication: Boston]
Language: eng
Number of pages: 54
Description: We present a model that helps explain several past collapses of securitization markets. Originators issue too many informationally insensitive securities in good times, blunting investor incentives to become informed. The resulting scarcity of informed investors exacerbates market collapses in bad times. Inefficiency arises because informed investors are a public good from the perspective of originators. All originators bene.t from the presence of additional informed investors in bad times, but each originator minimizes his reliance on costly informed capital in good times by issuing safe securities. Our model suggests regulations that limit the issuance of safe securities in good times.
Notes: "November 2011" -- Publisher's website.

Includes bibliographical references.