When borrowers cannot meet their debt service obligations to lending institutions, those lending institutions cannot meet their obligations to their own creditors. Policy makers must handle this by dealing with the lending institutions first. The most extreme pressures are typically experienced by the lenders that are the most highly leveraged and that have the most concentrated exposures to failed borrowers. These lenders pose the biggest risks of creating knock-on effects for credit worthy buyers and across the economy. Typically, they are banks, but as credit systems have grown more
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Does this suggest that early leading indicators exist amongst alternative lenders? Or particularly ones that focus on consumer lending that doesn’t generate economic productivity? e.g GEM, Q Card. What reports on these lenders’ performance can you source to provide an early warning of economic troubles.
