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Collateral Damage

Author

Listed:
  • Savvakis C. Savvides

    (Visiting Lecturer, John Deutsch International Executive Programs, Queen’s University, Canada)

Abstract

It is argued that lending where the overwhelming criterion is the collateral rather than the repayment capability of the project and the borrower is highly likely to be unproductive and will inevitably lead to a transfer of wealth. If this is done on a systematic and massive scale as was the case in Cyprus in the years leading to the 2013 crisis it is also likely to cause a long and deep balance sheet recession. Banks should therefore be in check and held accountable for such professional malpractices.

Suggested Citation

  • Savvakis C. Savvides, 2019. "Collateral Damage," Development Discussion Papers 2019-13, JDI Executive Programs.
    • Handle: RePEc:qed:dpaper:4535
    as

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    File URL: http://cri-world.com/publications/qed_dp_4535.pdf
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    References listed on IDEAS

    as
    1. Michael Hudson, 2012. "The Road to Debt Deflation, Debt Peonage, and Neofeudalism," Economics Working Paper Archive wp_708, Levy Economics Institute.
    2. Smith, Adam, 2008. "An Inquiry into the Nature and Causes of the Wealth of Nations: A Selected Edition," OUP Catalogue, Oxford University Press, number 9780199535927 edited by Sutherland, Kathryn.
    3. Savvakis C. Savvides, 2019. "Unproductive Debt and the Impairment of the Real Economy," Development Discussion Papers 2019-10, JDI Executive Programs.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Economic development; repayment capability; project evaluation; corporate lending; credit risk;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate

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