Retail banking crises and credit risk management : United States vs. Lebanon case

Abstract

This case is important because it sheds the light on the key issues that need to be in place in order to reduce the risk of credit default. If we are to understand the profound significance and the contribution made by lack of Credit controls, the easy credit terms of banks to grant credit facilities and the loosened government legislations that govern the whole lending activity, then we will learn how the Credit Crises was driven and accumulated over the years. On the other hand, we will ensure how a controllable lending environment that is well managed will generate healthy borrowings and serves its profound aim. This study will present the case of the United States housing bubble. It will discuss the main reasons leading to credit defaults. It will address the role of the traditional depository banks versus the investment banks in carrying the lending activity. The study will discuss leveraging, Subprime Lending, deregulations and other forms of practices that lead to future unbalanced credit portfolios. On the other hand, methodology continues to present the Lebanon situation in light of the tremendous increase in the prices of real estate. How banks are interacting with the situations, how credits are being granted and how lending portfolios are being monitored and controlled. The study will discuss leveraging, Subprime Lending, deregulations and other forms of practices that lead to future unbalanced credit portfolios. On the other hand, methodology continues to present the Lebanon situation in light of the tremendous increase in the prices of real estate. How banks are interacting with the situations, how credits are being granted and how lending portfolios are being monitored and controlled Consequently, all information obtained showed many challenges that bank's should face while prices of real estate are booming. Accurate measures should be placed in order to avoid unforeseen risks. The study showed how close credit monitoring, avoiding reckless banking behaviors would drive legitimate lending portfolios and is the essential drivers to control risk and avoid threats of any possible failure.