A paper by the IMF published this month on asset securitisation shows that if financial institutions securitise loans, retaining an interest in the equity tranche does not always induce the securitiser to diligently screen borrowers ex ante.

In the aftermath of the global financial crisis, both the US Government and the European Union have been pushing to force securitisers to retain economic exposure in securitised assets in order to better align their interests with those of investors.

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