Answer: Securitization makes originating banks approve and monitor loans carefully.

## Explanation This question asks which statement is **NOT** a consequence of securitization. Let's analyze each option: - **Option A** is the correct answer: Securitization actually creates **moral hazard** and **reduces** the incentive for originating banks to carefully approve and monitor loans. When banks can package and sell loans to investors, they have less incentive to maintain underwriting standards since they transfer the default risk away. - **Option B** is a consequence: Securitization does transfer default risk from the originator to investors who purchase the securities. - **Option C** is a consequence: By accessing broader capital markets through securitization, originating institutions can offer lower interest rates due to increased funding efficiency and risk distribution. - **Option D** is a consequence: Securitization creates investment vehicles that allow institutional investors to gain exposure to asset classes they might be restricted from holding directly (e.g., certain types of loans or mortgages). Therefore, Option A is NOT a consequence of securitization and is the correct choice for this "which is not" question.

Author: LeetQuiz Editorial Team