¶ … Student Loans Dangerous to the Economy? In Sharon Epperson's interview with Sarah Bloom Raskin, it becomes clear that not only are student loans dangerous to the economy, but also that the solution to the student-loan debt crises might have a significant impact on the financial future of multiple generations of Americans. The interview also makes it clear that Bloom Raskin's approach to loan debt does not appear to involve making education more affordable for students, but rather on educating people about interest rates and the ramifications of taking on certain levels of debt (Epperson, 2014)
"Warren said the measure, which would also allow those with privately held student loan debt to refinance their debt under the Federal Direct Loan program, equals savings for the consumer, which would be funneled back into the economy. It would also take a crack at the statistic showing that one in seven borrowers defaults on their student loans within three years of beginning repayment" (Rizzuto, 2014)
Conclusion For many reasons, bank managers require adequate measures and assessment of risk. Risk management techniques such as performance analysis, value-at-risk models, stress testing, Monte Carlo simulation, and heuristic controls may provide banking institutions with better insight in identifying the sources of market risk, leading to a better understanding and analysis of how their own risk profiles may evolve over time in terms of profit and loss variations (Avraamides)
Performance Analysis Historical performance analysis provides insight of how a portfolio has performed over time. However, older data has limited value for forecasting risk because the structure of the portfolio and the market environment are constantly changing (Brooks, Beukes, Gardner, and Hibbert, 2002)
This is accomplished by generating thousands of possible scenarios that investments might take. More technically, Monte Carlo finds the best approximate answers or distributions of probable answers to problems with many variables and/or many possible outcomes (Davidson)
Despite its usefulness as a portfolio risk technique, performance analysis is often overlooked by risk managers. Value-at-Risk (VaR) Model Value at risk is an estimate of the largest loss that a portfolio is likely to suffer during all but truly exceptional periods (Hopper)
The major disadvantage of Monte Carlo simulation is its complexity, but it does a good job of explaining risk exposures because it provides specific examples of events that are of concern. Heuristic Controls Information about future potential losses and about the likelihood they will occur usually has to be put together for every individual case with a good deal of design work and risk managers avoid the use of heuristics (Schubert, 2003)
Portfolio Risk Management In today's competitive banking environment, an important challenge is to ensure adequate diversification of revenue sources across products, market segments and market and credit risks (Sturzinger)
They were entrusted by the depositors by keeping their savings with them in the form of deposits for a specific period of time. This misappropriation of funds led to high recession in the United States housing mortgage industry and the entire financial sector of the World (Donath & Cismas, 2009)
They were just concerned with making money from the borrowers' interest payments. This is also a type of misappropriation of funds by the lenders (Goldmann, 2010)
The major examples of fraudulent financial dealings include theft, cheating, money laundering, counterfeiting, bribery, forgery, robbery, scams, and embezzlement or misappropriation of funds or assets. Generally, the victims of fraudulent financial dealings are individuals and businesses that are directly or indirectly associated with the convicting parties (Jennings, 2012)
These subprime loans were offered at quite adjustable rates without looking at the level of income, track record, repaying abilities, or other important aspects of the borrowers. These borrowers also found this opportunity attractive for their future comfort and availed it without considering whether they will be able to pay their obligation back or not (Magdoff & Foster, 2009)
The consequences of subprime loans have not ended yet; economists and researchers in the field of International Finance are of the view that they may further get worsen in the coming five to ten years period. Beside the criticism regarding the approval of subprime loans to low income borrowers, the lenders have also been strongly criticized for using unethical business practices in their customer dealings and transactions (Mandal, 2010)
In these countries the conversion of mutual savings, loan associations, and mutual savings banks into stock organizations is seen. Moreover the market factors also influenced the loan associations and resulted into a transformation for being at par with the financial institutions (Caprio Jr., & Vittas, 2007)
borrowers and depositors. The most significant control is about the business goals of the association (Dexter, 2009) The regular repayment method was adopted using share accumulation and sinking-fund
The main justification lies in the fact that the present study aims to examine motives, reasons, and patterns. The qualitative research design offers in-depth analysis and answers and captured multiple facets of the same phenomenon (Fossey, et al
S. laws and regulations have provided the loan associations and credit unions to provide a similar service to their customers (Griffin, 2010)
The quality of the research in the positive case research is critical in the definition as validity and reliability. In further requires the case to meet the required standards and as a result it can confirm the criterion for the applicability with quality content (Mayer, 2013)
Private lenders would not be as effective in providing this cushion. Governments favor policies removing barriers to minority homeownership, but the competing objective of combating the perceived threat of urban sprawl by some of these governments is simultaneously restricting homeownership opportunities for minorities (Almasi, 2003)
has historically been a nation that focuses on individual achievements, low-income families have had few opportunities to buy homes. Social Darwinism was first coined by Herbert Spencer, an English philosopher in the 19th century (Bethell, 1999)