Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • June 2013
  • Article
  • Journal of Financial Economics

Are There Too Many Safe Securities? Securitization and the Incentives for Information Production

By: Samuel G. Hanson and Adi Sunderam
  • Format:Print
ShareBar

Abstract

We present a model that helps explain several past collapses of securitization markets. Originators issue too many informationally insensitive securities in good times, blunting investor incentives to become informed. The resulting endogenous scarcity of informed investors exacerbates primary market collapses in bad times. Inefficiency arises because informed investors are a public good from the perspective of originators. All originators benefit from the presence of additional informed investors in bad times, but each originator minimizes his reliance on costly informed capital in good times by issuing safe securities. Our model suggests regulations that limit the issuance of safe securities in good times.

Keywords

Information; Debt Securities; Financial Crisis

Citation

Hanson, Samuel G., and Adi Sunderam. "Are There Too Many Safe Securities? Securitization and the Incentives for Information Production." Journal of Financial Economics 108, no. 3 (June 2013): 565–584. (Internet Appendix Here.)
  • Find it at Harvard
  • Read Now

About The Authors

Samuel G. Hanson

Finance
→More Publications

Adi Sunderam

Finance
→More Publications

More from the Authors

    • March 2021
    • Faculty Research

    Managing Science Communication at Bayer

    By: Joshua Schwartzstein and Aditya Vikram Sunderam
    • January 2021
    • American Economic Review

    Using Models to Persuade

    By: Joshua Schwartzstein and Adi Sunderam
    • 2020
    • Faculty Research

    Rate-Amplifying Investor Demand and the Excess Sensitivity of Long-Term Interest Rates

    By: Samuel G. Hanson, David O. Lucca and Jonathan H. Wright
More from the Authors
  • Managing Science Communication at Bayer By: Joshua Schwartzstein and Aditya Vikram Sunderam
  • Using Models to Persuade By: Joshua Schwartzstein and Adi Sunderam
  • Rate-Amplifying Investor Demand and the Excess Sensitivity of Long-Term Interest Rates By: Samuel G. Hanson, David O. Lucca and Jonathan H. Wright
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Digital Accessibility
Copyright © President & Fellows of Harvard College