The driving force behind the securitization of mortgages and automobile loans has been
A)the rising regulatory constraints on substitute financial instruments.
B)the desire of mortgage and auto lenders to exit this field of lending.
C)the improvement in information technology.
D)the relaxation of regulatory restrictions on credit card operations.

Question

Quizplus · Accepted Answer

The improvement in information technology has significantly facilitated the pooling and packaging of mortgages and automobile loans into securities that can be sold to investors. This process has enabled lenders to diversify their portfolios and increase their lending capacity, thereby promoting the availability of credit and reducing the cost of borrowing. The success of securitization has also encouraged the development of new financial instruments, such as collateralized debt obligations (CDOs) and asset-backed commercial paper (ABCP), which have further expanded the range and depth of capital markets.

The Driving Force Behind the Securitization of Mortgages and Automobile