Question

Explain and discuss the factors that have influenced the growth in structured finance. What are the characteristics of structured finance that tend to differentiate it from other forms of project finance?

Answer 1

There are various factors that had lead to emergence of structured finance. They are as follows-

1.large number of mergers and acquisitions which are taking place all across the world, has led to emergence of structured finance.

2. Huge fluctuations in securities market and changes in regulation most frequently by various regulatory authorities had also added to the emergence of structured finance.

3. A need for management of risk and leverage has led to emergence of structured finance.

4 . To obtain a competitive edge and managing its finances more efficiently has become the need of the hour and it has led to emergence of structured finance

5.fluctuations in value of assets which are held in the books of accounts have also added to the emergence of structured finance.

Structured finance are managed more efficiently and it is always regulated in advance and it is a proactive financial management strategy which is precise in nature and it is more reliable than project financing also.