ABSTRACT
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4.1 INTRODUCTION Wealthy individuals are often asset rich and cash poor. With their capital tied up in assets they tend to want access to loans backed by assets. Asset-backed securities (ABS) were first
introduced in the United States in the 1970s in the form of Mortgage backed securities. More recent forms are Automobile backed securities and Credit-Card sacked securities. These loans all have the underlying asset as the collateral in the case of credit default. However, the move toward loans backed by artworks has been much slower in evolving. This is mainly due to the inability to correctly assess the risk from changes in the price movements of art. Since the collection of a number of price indices this is now becoming easier. Price movements may be more easily tracked for the art market in general. However, the art market is made up from heterogeneous goods, where the value of an individual artwork is still very difficult to evaluate.
