Title: Role of SIVs in a financial crisis: the Citigroup debacle

Authors: Sheeba Kapil, Kanwal Kapil

Addresses: Indian Institute of Foreign Trade (IIFT), B-21, Qutab Institutional Area, New Delhi, India. ' Management Development Institute, Sukhrali, Gurgaon, 122001, India

Abstract: The subprime crisis engulfed not only the US economy, but has also put the global economies under dark clouds of uncertainty. This paper is an attempt to understand the financial crisis and causative factors for the same, the genesis of structured investment vehicles (SIVs), their nature, their business model and their contribution to the subprime crisis. Further, we intend to discuss the role of Citibank (the world|s largest bank), which pioneered the concept of SIVs, the fate of Citibank post subprime crisis, which forced the bank to go for major restructuring. This paper tries to find out the various reasons for this debacle which not only affected the largest bank of the world or the strongest economy like US, but continues to have a contagion effect on the entire global markets. In the end, the authors try to raise few research issues and larger issues related to public policy.

Keywords: structured investment vehicles; SIVs; financial crisis; subprime crisis; securitisation; mortgage backed securities; MBS; credit derivatives; credit rating; Citigroup; public policy; business models.

DOI: 10.1504/IJAMS.2009.023704

International Journal of Applied Management Science, 2009 Vol.1 No.3, pp.247 - 276

Published online: 08 Mar 2009 *

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