Revitalizing Securitization for Small and Medium-Sized Enterprises in Europe
Staff Discussion Notes, May 1, 2015
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- Revitalizing Securitization for Small and Medium-Sized Enterprises in Europe
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Bibliographic details
- Authors: Shekhar Aiyar, Ali J Al-Eyd, Bergljot B Barkbu, Andreas Jobst
- Published: May 1, 2015
- Series: Staff Discussion Notes
- DOI: https://doi.org/10.5089/9781498397643.006
Background
- SMEs account for a disproportionate share of output and employment in Europe and remain highly dependent on bank finance, which "dried up or became prohibitively expensive during the crisis."
- Broader access to alternative, long-term finance through securitization is identified as a means to limit SME exposure to banking sector difficulties and help revive credit.
Key findings
- Development of a well-functioning and liquid securitization market in Europe is impeded by multiple factors, requiring a comprehensive, multi-faceted strategy.
- Effective revival depends on regulatory reform, infrastructure development, and targeted, time-bound official sector support.
- A pan-European definition of high-quality securitization (HQS) is needed, centered on "simple, transparent and efficient asset structures" that would receive preferential regulatory treatment.
Strategy and required measures
- Regulatory differentiation:
- Greater regulatory differentiation between securities of different quality and underlying asset structures.
- Legal and reporting harmonization:
- Harmonized national enforcement and insolvency frameworks.
- Standardized reporting requirements.
- EU institutional capacity:
- Greater capacity of EU authorities to support new issuance.
- Official sector support:
- Targeted and time-bound official sector support to underpin market development.
Expected outcomes and rationale
- Broader securitization markets would provide SMEs with alternative, long-term funding sources and reduce dependence on bank lending.
- Preferential treatment for HQS instruments would help channel investor demand toward transparent, high-quality securitizations.
Definitions and terminology emphasized
- High-quality securitization (HQS): a pan-European definition comprising simple, transparent and efficient asset structures receiving preferential regulatory treatment.
- Relevant subject areas: Banking, Collateral, Credit, Economic sectors, Financial institutions, Financial services, Loans, Money, Securitization, Small and medium enterprises.
- Key keywords preserved from the source: asset structure, Collateral, Credit, credit risk, EU action, EU budget, EU country, EU funds, EU initiative, EU regulation, EU resource, Europe, financial intermediation, Loans, macro-financial linkages, portfolio funding, purchase program, restarting securitization, SDN, Securitization, securitization market, securitization structure, securitization transaction, Small and medium enterprises, SME finance, SME loan, SME securitization, Structured finance.
Revitalizing Securitization for Small and Medium-Sized Enterprises in Europe, Staff Discussion Notes No. 2015/007.
Content in this bundle
- _sdn1507
- _sdn1507annexii