{"id":27425,"date":"2015-03-30T01:32:38","date_gmt":"2015-03-30T01:32:38","guid":{"rendered":"http:\/\/vskills.in\/certification\/blog\/?p=27425"},"modified":"2024-04-03T13:16:04","modified_gmt":"2024-04-03T07:46:04","slug":"originate-and-distribute-model-of-banking","status":"publish","type":"post","link":"https:\/\/www.vskills.in\/certification\/blog\/originate-and-distribute-model-of-banking\/","title":{"rendered":"\u2018Originate and distribute\u2019 model of banking"},"content":{"rendered":"<p style=\"text-align: center\"><a ref=\"magnificPopup\" href=\"http:\/\/vskills.in\/certification\/blog\/wp-content\/uploads\/2015\/03\/\u2018Originate-and-distribute\u2019-model-of-banking.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-27570\" alt=\"\u2018Originate and distribute\u2019 model of banking\" src=\"http:\/\/vskills.in\/certification\/blog\/wp-content\/uploads\/2015\/03\/\u2018Originate-and-distribute\u2019-model-of-banking-300x141.jpg\" width=\"300\" height=\"141\" srcset=\"https:\/\/www.vskills.in\/certification\/blog\/wp-content\/uploads\/2015\/03\/\u2018Originate-and-distribute\u2019-model-of-banking-300x141.jpg 300w, https:\/\/www.vskills.in\/certification\/blog\/wp-content\/uploads\/2015\/03\/\u2018Originate-and-distribute\u2019-model-of-banking.jpg 327w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p>The changes in banking between 1970 and 2007, and especially the major<br \/>\ninnovations and growth in banking between 2000 and 2007, have one<br \/>\noutstanding feature. Banks have developed powerful instruments for credit<br \/>\nrisk transfer. Credit risk is another name for default risk and credit risk<br \/>\ntransfer is its transfer by one bank to another bank, bank-like entity or other<br \/>\ninvestors, for a price.<br \/>\nAs a result of these innovations, banks\u2019 business model was transformed.<br \/>\nOld-fashioned banking, which, in simplified form, we have represented as<br \/>\n\u2018basic retail banking\u2019 used asset management that could be described as<br \/>\n\u2018originate and hold\u2019. That means the bank originates a loan, with careful<br \/>\nregard to the quality of the borrower and the security provided against the<br \/>\nloan, and would hold it until its maturity. By that means, the bank holds and<br \/>\nmanages the risks on its assets.<br \/>\nThe new business model resulting from innovations in credit risk transfer is<br \/>\nwidely known as \u2018originate and distribute\u2019. The bank originates a loan and,<br \/>\ninstead of bearing the risk attached to it, sells the risk to a range of investors<br \/>\nwilling to bear the risk for a price. To the extent that a bank fits that model<br \/>\nits income comes from fees the bank charges for arranging loans, creating\u00a0credit default swaps and other instruments, creating and operating Special<br \/>\nPurpose Vehicles and a wide range of other fee-generating activities.<\/p>\n<p><a href=\"http:\/\/www.vskills.in\/certification\/accounting-banking-and-finance\">Click here for government certification in Accounting, Banking &amp; Finance<\/a><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The changes in banking between 1970 and 2007, and especially the major innovations and growth in banking between 2000 and 2007, have one outstanding feature. Banks have developed powerful instruments for credit risk transfer. Credit risk is another name for default risk and credit risk transfer is its transfer by one bank to another bank,&#8230;<\/p>\n","protected":false},"author":625,"featured_media":27570,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_joinchat":[],"footnotes":""},"categories":[1519],"tags":[1136,2855,2851,2852,2854,2853,909],"class_list":["post-27425","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-accounting-banking-and-finance","tag-banking","tag-innovations","tag-investor","tag-model","tag-modern","tag-original","tag-risk"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>\u2018Originate and distribute\u2019 model of banking - Vskills Blog<\/title>\n<meta name=\"description\" content=\"How have the innovations in banking influenced the system?\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.vskills.in\/certification\/blog\/originate-and-distribute-model-of-banking\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"\u2018Originate and distribute\u2019 model of banking - Vskills Blog\" \/>\n<meta property=\"og:description\" content=\"How have the innovations in banking influenced the system?\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.vskills.in\/certification\/blog\/originate-and-distribute-model-of-banking\/\" \/>\n<meta property=\"og:site_name\" content=\"Vskills Blog\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/vskills.in\" \/>\n<meta property=\"article:published_time\" content=\"2015-03-30T01:32:38+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-04-03T07:46:04+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.vskills.in\/certification\/blog\/wp-content\/uploads\/2015\/03\/\u2018Originate-and-distribute\u2019-model-of-banking.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"327\" \/>\n\t<meta property=\"og:image:height\" content=\"154\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Sneh lata\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Sneh lata\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"1 minute\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.vskills.in\/certification\/blog\/originate-and-distribute-model-of-banking\/\",\"url\":\"https:\/\/www.vskills.in\/certification\/blog\/originate-and-distribute-model-of-banking\/\",\"name\":\"\u2018Originate and distribute\u2019 model of banking - 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