Securitisation in BRICS: Issues, challenges and prospects

While there is no doubt that securitisation contributed to the 2007-9 global financial crisis (GFC), it remains a very viable and flexible financing tool especially for developing and emerging markets. Focusing on the BRICS (Brazil, Russia, India, China and South Africa), this paper examines the issues, challenges and prospects of securitisation in these economies. Although the challenges such as the need for more robust and effective regulation, limited size and development of their financial markets remain, we argue that securitisation should be properly explored and utilised to address the funding gaps in developing and emerging markets. Possibly learning from the experiences of the Developed economies (for instance USA and UK) during the GFC, the BRICS seem to be developing a more prudential and strident regulation of their securitisation markets. If this is properly applied, such as the increased Minimum Risk Requirement (MMR), securitisation might turn to be a tool not only for financing but also a key one for the development and expansion of their financial markets.