What’s on a bank’s mind?

Print Friendly

What’s there so peculiar about a bank’s response when your mortgage payment is late? A bank’s behavior facing a late payment from a borrower – i.e. the debtor – can’t be any different from any other creditor’s behavior: totally oriented at maximizing credit recovery. A bank, as a financial intermediary, has sizable skills and expertise coupled with considerable information assets – integrally enhanced by their very private nature – that place it in a strength condition, both in terms of bargaining power and moral suasion, capable of exerting not only a coordination but even a control on both the defaulter and the other creditors. This applies only in case the outstanding debt is minimal. Turn the argument upside down when outstanding debt is large.

Share Button
Posted in Economics
Tags: ,

Leave a Reply

Your email address will not be published. Required fields are marked *

*

39 + = 41

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Tweets