Cryptocurrency Q&A
What are the disadvantages of securitization?
What are the disadvantages of securitization?
ShintoSanctuary
Thu Sep 05 2024
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6 answers
1980
Could you elaborate on the potential drawbacks of securitization? I'm curious to understand the risks and limitations associated with this financial process. Specifically, how might it impact investors, borrowers, and the broader financial system? Are there any specific examples of past issues or challenges that have arisen from securitization? Additionally, what measures can be taken to mitigate these potential disadvantages?
6 answers
Valentina
Sat Sep 07 2024
Additionally, securitisation can lead to a lack of transparency, making it difficult for investors to fully understand the risks and rewards associated with their investments.
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HanbokGlamour
Sat Sep 07 2024
Another drawback is the potential for credit risk, as the performance of the underlying assets can significantly impact the value of the securities issued.
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BitcoinBaron
Sat Sep 07 2024
Securitisation, a method of raising long-term capital, can be both intricate and costly. Despite being less expensive than a full share flotation, it still poses significant financial hurdles for companies.
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SejongWisdomKeeperEliteMind
Sat Sep 07 2024
Moreover, securitisation can be subject to strict regulatory requirements, adding another layer of complexity and cost to the process.
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Leonardo
Sat Sep 07 2024
One major disadvantage of securitisation is its potential to limit a business's future fundraising options. By locking in capital through securitisation, companies may find themselves with fewer avenues to access additional funds.
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