Islamic Securitization - The Right Way Forward?

RGE Monitor:Introduction

The collapse of the securitization market and the ensuing market turbulence have cast serious doubts on this economic proposition of unbundling, transforming, and re-distributing credit risk via structured finance instruments.

In view of sweeping fiscal intervention in the financial sector, a widespread retrenchment of mortgage exposures, and substantial liquidity injections by central banks to support inter-bank money markets, both the scale and persistence of the current credit crisis seem to suggest that pervasive securitization — together with improvident credit origination, inadequate valuation methods, and insufficient regulatory oversight — can perpetuate market disruptions, with potentially adverse consequences for financial stability and economic growth...Continue Reading