The tools and techniques of structured finance have changed banking remarkably over the past twenty years. This area grew to become larger than the sum total of traditional banking deposits in 2007. Despite this, the field is poorly understood and its connection to macroeconomic stability was underestimated until the credit crisis. This paper explores the structured finance market in three phases. First, the market is broken into parts based on the incentives and motivations of each of the three major agents in the field. Next, a critical review of pricing models that are used to justify the valuations of the products of structured finance is discussed using actual market data. Finally, the connection between structured finance and the real economy is explored. It is the conclusion of this paper that structured finance can increase economic efficiency, but thus far the risks that its employment create are greater than their benefit.
","abstract_html":"<p>The tools and techniques of structured finance have changed banking remarkably over the past twenty years. This area grew to become larger than the sum total of traditional banking deposits in 2007. Despite this, the field is poorly understood and its connection to macroeconomic stability was underestimated until the credit crisis. This paper explores the structured finance market in three phases. First, the market is broken into parts based on the incentives and motivations of each of the three major agents in the field. Next, a critical review of pricing models that are used to justify the valuations of the products of structured finance is discussed using actual market data. Finally, the connection between structured finance and the real economy is explored. It is the conclusion of this paper that structured finance can increase economic efficiency, but thus far the risks that its employment create are greater than their benefit.</p>","abstract_has_math":false,"creators":["Fahey, Brian Charles"],"institution":null,"degree_name":"M.A.","degree_level":"Masters Thesis","degree_discipline":null,"degree_department":null,"school":null,"contributors":["Tracy Mott, Ph.D.","Markus Schneider","Chip Reichardt","Robert Urquhart"],"advisors":[],"committee_chairs":[],"committee_members":[],"year":2011,"date_issued":"2011-01-01T08:00:00Z","date_published":"2011-01-01T08:00:00Z","updated_at":"2026-07-24T02:03:35Z","subjects":["Collateralized debt obligations","Credit default swap","Efficient Market Theory","Structured finance","Economics","Finance"],"languages":["en"],"rights":["Copyright is held by the author. User is responsible for all copyright compliance.
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