Banks became more willing to make subprime loans because of:

Question

Quizplus · Accepted Answer

Securitization allowed banks to package and sell subprime loans to investors, reducing the risk of default and freeing up capital to make more loans. This incentivized banks to make more subprime loans, leading to the subprime mortgage crisis of 2008. Leverage, hedging, and herd behavior also played a role in the crisis, but securitization was the main driver of the increase in subprime lending.

Banks Became More Willing to Make Subprime Loans Because Of