Structured Finance, Risk Management, and the Recent Financial Crisis

5 Pages Posted: 16 Oct 2009

See all articles by Georges Dionne

Georges Dionne

HEC Montreal - Department of Finance

Date Written: October 13, 2009

Abstract

Structured finance is often mentioned as the main cause of the latest financial crisis. We argue that structured finance per se did not trigger the last financial crisis. The crisis was propagated around the world because of poor risk management such as agency problems in the securitization market, poor rating and pricing standards, rating agency incentives, lack of market transparency, the search for higher yields by top decision makers and the failure of regulators and central banks to understand the implications of the changing environment.

Keywords: structured finance, risk management, financial crisis, collateral debt obligation (CDO), asset back commercial paper (ABCP), rating, pricing, securitization, regulation of financial markets

JEL Classification: D81, D82, D86, E5, G01, G12, G14, G32, G33

Suggested Citation

Dionne, Georges, Structured Finance, Risk Management, and the Recent Financial Crisis (October 13, 2009). Available at SSRN: https://ssrn.com/abstract=1488767 or http://dx.doi.org/10.2139/ssrn.1488767

Georges Dionne (Contact Author)

HEC Montreal - Department of Finance ( email )

3000 Chemin de la Cote-Sainte-Catherine
Montreal, Quebec H3T 2A7
Canada
514-340-6596 (Phone)
514-340-5019 (Fax)

HOME PAGE: http://www.hec.ca/gestiondesrisques/

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