Question1. The Financial Crisis of 2007 that started in the US has shifted to the European countries. Economic growth worldwide is gradually slowing down with the risk of a global recession.
Problem1. What do you understand by the term financial development?
Probblem2. Critically assess the concept of “too big to fail” with regards to role of big banks during financial crisis.
Problem3. Analyze and compare the main reasons that caused the Great Depression of 1929 and the Financial Crisis of 2007-2010.
Question2. A key skill for any Relationship Manager dealing with corporate customers is being able to assess accurately, structure and present a lending proposition. Failure to correctly advise a customer when dealing with a lending request can result at best in a missed business opportunity and at worst in the business failure and ultimate insolvency of the customer and a bad debt loss for the lender. It is crucial that the latter situation be avoided for the future success of the relationship between the lender and the borrower. Voldemort Banking Corporation (VBC), the largest bank in the city of Dumbledore has a plethora of measures in place to manage credit risk but focuses mainly on credit allocation decisions, credit enhancement, and discrimination between borrowers, loan review mechanism and loan sales.
Required:
Problem1. Explain the main important drivers of credit risks in a bank like Voldemort Banking Corporation.
Problem2. Distinguish with examples between positive and negative covenants and illustrate why it is important for a bank like Voldemort Banking Corporation to include fair covenants in its letters of offer.
Problem3. Assume you are a Corporate Relationship Manager of Voldemort Banking Corporation. Use the CCCPARTS tenet for credit analysis to explain how you would assess, structure and present a lending proposal.