What is Securitization?

Securitization has two meanings: In a narrow sense, it refers to the process by which the assets (mainly loans or collateral) of traditional banks and savings institutions are transformed into transferable securities. Such securities may be purchased by depository financial institutions or by non-bank investors. In a broad sense, securitization refers to the new development of various new negotiable instrument markets in recent years, such as floating instruments that facilitate the issuance of instruments on the international financial market. A new tool for raising funds through a borrowing mechanism. The development of this process means that investors and borrowers bypass the banks to conduct commercial transactions directly, in fact weakening the intermediary role of the banking system. ^[1]

Securitization

The development of securitization

Means there will be a lack of liquidity, but it will be predictable

It refers to the way in which the demander of funds raises funds by issuing securities, that is, "disintermediation" or "disintermediation".