This paper builds on recent research by Fender and Mitchell (2009) who show that if financial institutions securitize loans, retaining an interest in the equity tranche does not always induce the securitizer to diligently screen borrowers ex ante. We first determine the conditions under which...

In order to incentivize stronger issuer due diligence effort, European and U.S. authorities are amending securitization-related regulations to force issuers to retain an economic interest in the securitization products they issue. This paper contributes to the process by exploring the economics...

This paper builds on recent research by Fender and Mitchell (2009) who show that if financial institutions securitize loans, retaining an interest in the equity tranche does not always induce the securitizer to diligently screen borrowers ex ante. We first determine the conditions under which...

This paper builds on recent research by Fender and Mitchell(2009) who show that if financial institutions sell loans via asset securitization, retaining interest in the equity tranche does not always induce the securitizer to diligently screen borrowers ex ante. We first investigate under which...

In order to incentivize stronger issuer due diligence effort, European and U.S. authorities are amending securitization-related regu- lations to force issuers to retain an economic interest in the securitization products they issue. This paper contributes to the process by exploring the...