An exploratory study of the adoption and use of securitisation in New Zealand: An interdisciplinary enquiry
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Current explanations for securitisation rely predominantly on empirical logistic regression models. Quantitative models predicting the likelihood of securitisation do not consider all of the factors that influence the securitisation decision. In combination with conflicting extant literature and a lack of industry evidence, the answer to why some firms securitise and others do not is incomplete. This study examines how New Zealand (NZ) non-bank financial institutions (NBFIs) make the decision to adopt and use securitisation and how that compares to extant theory. The background theory of capital structure is alone unable to address the research question, therefore a multidisciplinary framework is used to determine what could contribute to an understanding of the decision to adopt and use securitisation. Four case studies are carried out in NZ NBFIs and the findings are compared to literature from Finance, Decision Research, Psychology, and their related sub-disciplines. This research highlights the usefulness of a multidisciplinary approach to examining corporate finance decisions and the complementary nature of quantitative and qualitative models. Firm and region-specific information improves understanding of the securitisation decision at the micro level in areas previously unexplained by macro level theory. While NZ NBFIs make the decision to adopt and use securitisation in a manner consistent with aspects of securitisation and capital structure literature, this study provides insights into problems surrounding information availability, the importance of information sources and the reliance firms place on such information, decision-making methods utilised, the factors and process involved in selecting securitisation over alternative financing, and why some characteristics of securitisers in NZ differ from what is expected by quantitative securitisation models. Key Words: Securitisation, Capital Structure, Decision making, Non-Bank Financial Institutions
2009 AFAANZ Conference Proceedings
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Financial Institutions (incl. Banking)