Are Covered Bonds a Substitute for Mortgage-Backed Securities?
Research output: Contribution to journal › Article › peer-review
Electronic versions
Given the problems in the mortgage-backed securities (MBS) market during the financial crisis, some suggest that covered bonds (CB) might be a substitute for MBS. This could lead to a number of policy alternatives in countries where regulation and business have been mainly leaning to one of these types of securities. Examining the use of CB and MBS in the U.S. and Europe, we find that the two often seem to be used for different purposes. Banks are more likely to use CB when they have liquidity needs while MBS are associated with risk management and agency problems. Introducing MBS to markets where only CB are common or CB to markets where only MBS are common could have large effects.
| Original language | English |
|---|---|
| Pages (from-to) | 238-253 |
| Journal | Journal of Economic Policy Reform |
| Volume | 20 |
| Issue number | 3 |
| Early online date | 28 Mar 2017 |
| DOIs | |
| Publication status | Published - Jul 2017 |
Total downloads
No data available