Tuesday, May 4, 2010


Andrew Gelman wonders why "fancy" financial products use the word "tranche" rather than slice. I suspected the reason was historical - perhaps related to loan tranches by the IMF post Bretton Woods. Thus, I was surprised when a Google News Search using "loan" and "tranche" turned up entries as early as 1930 referring to the Dawes Plan which was an attempt by the Triple Entente (basically Great Britain, France and Russia) to collect war reparations from Germany.

The use of tranches for securities came later. The search for "security" and "tranche" gave results as early as 1980.

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