Lending and Borrowing in Consumer Credit Market

By

ACKNOWLEDGEMENTS

My thanks go out to all who have helped me complete this study and with whom this project may have not been possible. In particular, my gratitude goes out to friends, facilitator and family for extensive and helpful comments on early drafts. I am also deeply indebted to the authors who have shared my interest and preceded me. Their works provided me with a host of information to learn from and build upon, also served as examples to emulate.

DECLARATION

I, (Your name), would like to declare that all contents included in this dissertation stand for my individual work without any aid, & this dissertation has not been submitted for any examination at academic as well as professional level previously. It also represents my own views & not essentially the ones associated with university.

Signed __________________ Date _________________

TABLE OF CONTENTS

ACKNOWLEDGEMENTSii

DECLARATIONiii

Issues in Irresponsible Lending and Borrowing1

Main Sources of Data2

Schematic Model of Research Topic2

Factors affecting lending and Borrowing in Consumer Credit Market3

Lending and Borrowing in Consumer Credit Market4

Purpose Statement5

Ethical Issues5

Corporation Assuming Responsibilities6

Secretive and Competitive Nature of Lending and Borrowing Market6

Credit Risk7

Credit Risk and Portfolio Choice8

Valuation of Credit Risk8

Management of Credit Risk9

REFERENCES10

Issues in Irresponsible Lending and Borrowing

Various issues are associated with the irresponsible lending and borrowing. Merging the critical elements of the lending and borrowing market, criminological theory, and diffusion of innovations theory, and making an argument for the utilization of diffusion theory in the study of white-collar crime opportunities, requires that each of these areas be individually understood. This section of the study discusses the issues in the lending and borrowing markets along with the phenomenon with an examination of the credit industry and the development and use of the lending and borrowing (Zheng, 2006, 391).

Historical mortgage lending in the United States (U.S.) occurred almost exclusively at the local level, with all parties involved in the transaction (i.e., borrowers and lenders) working and residing in the same communities. Buyers/borrowers knew their bankers and the lenders knew their customers; the bank would lend the money from its own coffers and the borrower would repay the bank. In this type of exchange relationship, or when “benefits are given with the expectation of receiving a comparable benefit in return or as repayment for a benefit received previously”, the participants in the transaction share a long-term mutual interest in the quality of the relationship and the performance of the “benefit” or in this case, the mortgage loan. Under this scenario, as Wang & Zhang, (2008) notes, banks had a greater financial incentive to screen loan applicants when they retained the mortgages (Wang & Zhang, 2008, 1133).

Main Sources of Data

The main source that has been used in the study is the secondary source of data. The secondary data was accessed by going online and using different online libraries that mainly includes the Proquest, Routledge, Phoenix and other libraries etc. The usage of these online secondary resources have made it possible to collect the reliable data with regard to the issues surrounding irresponsible lending ...