The shadow banking credit pipeline relies on Securitization Frameworks to bundle individual loans into tradeable debt securities, transferring risk across global asset markets.

[Bank Originates Mortgages] ---> Sells Assets to Independent SPV ---> Bundles Loans into Tiers ---> Issues Asset-Backed Securities (ABS)

The originating bank sells a pool of illiquid assets (such as residential mortgages or auto loans) to an independent, off-balance sheet entity known as a Special Purpose Vehicle (SPV). The SPV structures these loans into risk tranches (Senior, Mezzanine, and Equity) and issues Asset-Backed Securities (ABS) to institutional investors. This structure spreads credit risk but can obscure asset quality, creating systemic risk if the underlying loans default.