Securitization

Securitization is the financial process of converting various types of assets, like loans or mortgages, into tradable securities. This involves pooling these assets together and creating new financial instruments that can be sold to investors. By doing this, the original lenders receive immediate capital, while investors earn returns based on the payments from the underlying assets. It's a way to increase liquidity in the financial market, enabling banks to lend more and diversifying risk for investors. Overall, it connects borrowers with investors, facilitating the flow of money in the economy.