Structured Investment Vehicles (SIVs)

Structured Investment Vehicles (SIVs) are specialized financial entities that borrow money by issuing short-term debt, such as commercial paper, and then invest that money in longer-term assets like bonds and securities to generate higher returns. The goal is to profit from the difference between the interest earned on investments and the cost of borrowing. SIVs are typically off-balance-sheet entities, meaning they are separate from the parent bank or institution, allowing them to operate with some financial independence and sometimes higher leverage. They played a significant role in financial markets, especially before the 2008 financial crisis.