Structured Finance

ƒÜ Definition A "structured finance" is defined as "a program where receivable interests and asset-backed securities issued by multiple participants are purchased by a special purpose entity that repackages those exposures into securities that can be sold to investors." It is also a service offered by many large financial institutions for companies with very unique financing needs which usually don't match conventional financial products such as a loan. In addition, structured finance usually involves …

…expertise. From an investor perspective, structured finance has allowed for a more widely diversified population of investment alternatives from which to choose, with varying degrees of credit, interest rate, or prepayment risks from which to choose. In short, when properly structured, these are legitimate transactions meeting important business and economic needs. The Enron transactions were immoral, unusual transactions designed to take risk rather than ameliorate it, entirely unlike the vast majority of legitimate structured fin