The low-rated CMBS market : mortgage REIT, financial innovation and policy lessons from the Asian and Russian financial crisis

As one of the most important financial innovations in 1990s, Commercial Mortgage-Backed Securities (CMBS) have provided significant amounts of financing for commercial real estate. However, when the Asian and Russian financial crisis hit in 1998, the low rated CMBS market almost dried up and one of the dominant investors Criimi Mae went to Chapter 11 for protection. This study investigates the events systematically from the perspectives of market structure and product development in the context of financial crisis. We found that the private and illiquid market structure and the short term marked-to-market repo financing together resulted in the disequilibrium of the low rated CMBS market during the financial crisis. Information efficiency and more resilient financing mechanism are needed to mitigate the conflicting interest between issuers/underwriters and investors of low rated CMBS.

Department dc:contributor.department

Massachusetts Institute of Technology. Dept. of Urban Studies and Planning.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2004

Author dc:creator

• Su, Yi, 1975-

Advisor dc:contributor.advisor

• William C. Wheaton.

• Urban Studies and Planning.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

en_US

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/28751

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/28751