Chapter 1, Problem 18PS

Summary Introduction

Securitization leads to reduction in the use of intermediaries between producers and consumers. Securitization gives a path for market participants to bypass intermediaries such as banks.

Introduction:

Securitization is the process of merging various assets into financial instruments that promotes liquidity in the market place. Thus the pooling of various assets enables the small individual investors to buy various assets pertaining to large companies which are not possible if he is doing single bulk purchase.