Special Purpose Vehicles and Securitization

摘要: This paper analyzes securitization and more generally ?special purpose vehicles? (SPVs), which are now pervasive in corporate finance. The first part of the provides an overview institutional features SPVs securitization. second a model to analyze motivations for using conditions under sustainable. authors argue that key source value is they help reduce bankruptcy costs. Off-balance sheet financing involves transferring assets SPVs, reduces amount subject costs, since carefully designed avoid bankruptcy. most advantageous sponsoring firms risky or face large become sustainable repeated SPV game, because can implicitly ?commit? subsidize ?bail out? their when would otherwise not honor its debt commitments, despite legal accounting restrictions contrary. third tests two implications unique data on credit card securitizations. First, riskier should securitize more, ceteris paribus. Second, investors know sponsors bail out if there need, pricing will care about risk sponsor defaulting, above beyond assets. find evidence consistent with these implications. ; Also issued as Payment Cards Center Discussion Paper No. 05-13