The pooling and repackaging of economic assets such as loans, bonds, and mortgages, in order to reallocate risks and obtain higher credit ratings. In so doing, a prioritized capital structure of claims (known as tranches) is issued against such collateral pools. A bank, for example, can repackage and sell off its exposure to home mortgages, credit card loans, and other assets. Virtually, the prioritization scheme in which claims are structured renders many of the tranches far safer than individual assets in the underlying pool. The issuance of structured securities was dramatically expanded thanks to repackaging the risks and creating low-risk assets for otherwise risky collateral. However, the empirical evidence, emerging from the recent financial crisis (2008), has shown that structured products are actually much riskier than originally claimed.

It is noteworthy that structured finance finds its origins in factoring. Before the mid-1980s, companies had used to sell their receivables (uncollected debts) or rights to payments (e.g. lease payments) owed by other parties (such as clients, customers, etc). In other words, structured finance was basically a modern version of factoring.

Structured products are not homogeneous as the risk/return characteristics differ across various types. However, quite a good deal of such products are based on derivatives. Examples of structured products include: asset-backed securities, mortgage-backed securities, collateralized debt obligations, credit derivatives, collateralized bond obligations, collateralized loan obligations, structured notes, etc.