Securitization: An Overview
Introduction
Securitization is a powerful financial tool that renders
possible the profitability of illiquid assets. We all agree that
securitization contributed to the 2008 Financial Crisis,
demonstrating how this powerful business instrument is a
double-edged sword: it is capable of both boosting and
devastating an economy. The United States also commonly known as an
unchallenged leader in securitization markets. However, much of the
current activity is happening in the Middle East, including the
United Arab Emirates, where the new wave of securitization markets
is emerging.
Definition
Through this financial process, several illiquid assets are
packaged into pools and transformed into securities. The
third-party investors in a secondary market then purchase these
securities or their related cash flows. In other words, the
security interests in the pool are sold to investors. The process
enables the conversion of an asset or a
