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International Journal of Academic Research in Economics and Management Sciences

Open Access Journal

ISSN: 2226-3624

Impact of loan Securitization on the Soundness of Banks in Pakistan

Robina Irama, Qaiser Abbasb, Muhammad Nomanb, Arooj Fatima

http://dx.doi.org/10.6007/IJAREMS/v7-i3/4518

Open access

The worldwide financial crisis considered as a most severe economic outcomes and several huge financial organizations were on the threshold of disintegrate as a consequence of unnecessary disclosure to securitized assets. New sources of financing seems and the liquidity effect of securitization are clear in cash transactions. The research objectives contains distinctive research questions containing the critical assessment of the loan securitization, assessment of bank soundness and the empirical assessment of the impact of the loan securitization on bank soundness in Pakistan. Results shows that the overall value of the log likelihood for this model is -61.27 which shows a good fit of the model for our analysis. The smaller value of log likelihood justifies the reliability and better adoptability of the model. The coefficient of the independent variable indicates the average variation of logit with one-unit change of each independent variable. The positive or negative of the coefficient indicates the positive or negative effects of independent variables on the dependent variable. For example, the coefficient of liquid assets /total assets is 0.0148991 is greater than 0, which means liquid assets /total assets has a positive effect on securitization. The securitization's impact on bank soundness shows actually how much credit risk is being transfer to external investors so the basic aim of this work is to empirically investigation of securitization and credit risk. The study provides a valuable information to policy an decision makers.