Abstract:The recent real estate bubble was fuelled by non‐risk‐adjusted lending policies, low interest rates, and complex finance vehicles. Mortgage‐backed securities (MBS) played a crucial role in the crisis. These vehicles were praised as liquid capital market instruments that allowed mortgage lenders to replenish their funds, which could then be used for additional origination activities. However, in some forms, securitized mortgage pools are highly complex and hard to price. It turned out that MBS were not able to … Show more
“…We consider the temporary illiquidity the most straightforward explanation, as the UK real estate market and related instruments experienced a general liquidity drought at that time, see e.g. Syz and Vanini (2009). However, to further verify the implied boundary values for the friction costs, we compare our results with other research and market observations.…”
“…We consider the temporary illiquidity the most straightforward explanation, as the UK real estate market and related instruments experienced a general liquidity drought at that time, see e.g. Syz and Vanini (2009). However, to further verify the implied boundary values for the friction costs, we compare our results with other research and market observations.…”
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