securitization

Vocabulary Word

Definition

'Securitization' is a financial method where a company takes loans, mortgages, or other types of debts and packages them together to create a security which can be traded.

Examples in Different Contexts

In sustainable finance, 'securitization' of green assets can drive environmental initiatives. A sustainability analyst might declare, 'Green securitization allows us to allocate capital efficiently to environmentally beneficial projects, accelerating sustainable development goals.'

Practice Scenarios

Academics

Scenario:

The 2008 financial crisis revolved heavily around mortgage-backed securities. These complex financial instruments played a key role.

Response:

Absolutely, securitization played a large part, especially with the infamous 'toxic' mortgage-backed securities.

Business

Scenario:

Our organisation is sitting on a large portfolio of mortgages. There must be a way to leverage this.

Response:

One option might be to consider securitization. Doing so could turn our mortgages into assets we could trade.