00000nam 2200000za 4500 9.827039 CaOODSP 20221107144723 cr ||||||||||| 161107s2016 oncd ob f000 0 eng d CaOODSP eng eng fre n-cn--- FB3-5/2016-46E-PDF Kuncl, Martin. Fragility of resale markets for securitized assets and policy of asset purchases [electronic resource] / by Martin Kuncl. [Ottawa] : Bank of Canada, c2016. ii, 57 p. Staff working paper, 1701-9397 ; 2016-46 "October 2016." Includes bibliographical references (p. 35-37). "Markets for securitized assets were characterized by high liquidity prior to the recent financial crisis and by a sudden market dry-up at the onset of the crisis. A generalequilibrium model with heterogeneous investment opportunities and information frictionspredicts that, in boom periods or mild recessions, the degree of adverse selection in resale markets for securitized assets is limited because of the reputation-based guarantees by asset originators. This supports investment and output. However, in a deep recession, characterized by high dispersion of asset qualities, there is a sudden surge in adverse selection due to an economy-wide default on reputation-based guarantees, which persistently depresses the output in the economy. Government policy of asset purchases limits the negative effects of adverse selection on the real economy, but may create a negative moral hazard problem"--Abstract, p. ii. Includes abstract in French. gccst Capital markets gccst Financial crisis gccst Government policy Bank of Canada. Staff working paper (Bank of Canada) 1701-9397 ; 2016-46 (CaOODSP)9.806221 PDF 722 KB https://publications.gc.ca/collections/collection_2016/banque-bank-canada/FB3-5-2016-46-eng.pdf