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 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...