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p. 433. Securitized bankinglocked

  • John Goddard
  •  and John O. S. Wilson

Abstract

Preceding the global financial crisis of 2007–09, an alternative business model of banking evolved. An important element in the development of the securitized banking model was a growing tendency for banks to rely less heavily on deposits as a source of short-term finance, and more heavily on other sources such as the repo market, commercial paper, and derivatives. ‘Securitized banking’ explains that having raised short-term funding through these means, the bank can deploy the funds to support loans to borrowers such as house purchasers. Often a bank will bundle a large number of loans together and sell the package to a Structured Investment Vehicle set up by the bank to administer the loans.

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