uick capitol and receiving cash flows, but they also carry disadvantages such as risk for both the seller and investor. Asset Securitization is a tool that maximizes capitol and minimizes risk due to diversification.

Asset securitization over other meth

Asset securitization requires a developed capital market. There needs to be diverse sets of large investors that would be interested in adding some amount of the assets to their portfolio. As financial risks become greater, financial institutions will focus more on risk management. Part of this is diversification in ones asset base and securitization facilitates asset and liability management. Because I do not believe that financial risk will diminish in the future I imagine that asset securitization will continue to grow with the further development of individual country's capital markets. Because of the increasing mobility of capital due to globalization, communications and the internet, shareholder capitalism will be a strong force in the future. The more the corporations depend on the stock market for capital raising, the higher the attention given to shareholders. The ability to move funds around the world is orders of magnitude faster now than 20 years ago. Also because of increased globalization of business the amount of funds moving around the globe has increased dramatically. Generally speaking the free flow of funds is a good thing as it promotes economic efficiency. However, the increased speed and size of capital flows has led to greater dangers, both for investors and borrowers. For countries it has increased the cost of pursuing policies that are unsustainable, because when the dam breaks there is a lot more water behind it. It is also more dangerous for investors because the speed and quantity of information has not keep up with that of capital. Government officials and corporations are just as slow to change policies as 20 years ago. So the end result is that occasionally mis-information flows or excess flows of capital will occur. However, short of re-establishing capital controls or putting limits on international portfolio flows (which would be damaging to investor diversification and countries access to capital, this will remain!

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