Question: a) Define securitization. b) Why do banks engage in securitization (what benefits do they get out of it)? c) Can we speak of a generic

a) Define securitization.

b) Why do banks engage in securitization (what benefits do they get out of it)?

c) Can we speak of a generic bank engaging in securitization or do we need to distinguish between small and large banks or by some criteria? The better answer will employ balance sheets in the discussion.

d) What benefit is supposed to accrue to the rest of the financial system from securitization?

e) What are the risks inherent in securitization (why may these benefits NOT accrue)?

f) Securitization may cause less small business lending? Why? It may cause more? Why?

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