Introduction to Financial

Markets & Institutions

Lecture 19-20
Responsible Lending and
Financial Crises
Objectives:

● Understand Meaning of Responsible Lending

● Discuss Affordability, Transparency of terms and

conditions and supporting borrower in their
repayment difficulties

● Understand What is a financial crisis?

● Explain how does the financial crisis affect the

stock market?
Meaning of
Responsible
Lending
Meaning of Responsible Lending

 Responsible lending is the decision of

the lender to prioritise the client. It
entails making sure that services are
accessible to customers and that the
items are priced affordably.
Meaning of Responsible Lending

 Responsible Investing also ensure that

the loan's terms and conditions, as well
as all other pertinent information, are
prominently presented and easily
understood. Responsible lending
includes other aspects as well, such as
the credit and affordability checks that
lenders conduct.
Responsible Lending

 It aid the lender in determining if the

borrower has the resources to repay
the loan while still managing their
other financial obligations.
Additionally, it give the lender access
to the applicant's credit history so
they can determine whether they
have the ability to repay the loan.
Activity

https://
www.youtube.com/
watch?v=
iwxdUPN_OhQ
Importance of Responsible Lending

 Responsible financing is crucial since it ensures

that the client may make an informed choice.
Customers are able to compare products till they
locate a loan that is ideal for them by getting all
the facts up front. All of this is done to ensure
that the client can responsibly handle their debt
and won't experience unwarranted financial
hardship.
Pillars of Responsible Lending

Supporting
Transparency of
borrowers in
Affordability Terms and
repayment
Conditions
difficulties
Recall
Case Study

https://www.businesstoday.in/op
inion/columns/story/responsible
-lending-need-of-the-hour-for-in
dia-105741-2018-04-02
 Case Study Questions
What is the status of Responsible Lending In India?

Do you think Responsible lending can help India? Why or

why not
Meaning of
Financial
Crises
Meaning of Financial Crises

 Any circumstance in which one or more

important financial assets, such as
stocks, properties, or oil, unexpectedly
lose a sizable portion of their nominal
value is referred to as a financial crisis.
Financial Crises

 It is difficult to predict the financial

crisis because it might be started by
a relatively little incident or series of
minor ones.
 It happens infrequently but very
consistently, frequently resulting in a
critical phase of total economic
slump.
Major Financial Crises

 Image reference: https://www.wallstreetmojo.com/financial-crisis/#financial-crisis-explained

Global Financial Crises 2008-09

https://www.youtube.com/
watch?v=Q-zp5Mb7FV0
 Breakout Session
What are the key takeaways from the session
Causes of Financial Crises

Subsidies and
Liquidity Leverage
Taxes
Recall
Financial Crises and Stock Market

https://www.forbes.com/sites/
sergeiklebnikov/2022/06/02/heres
-how-the-stock-market-performs-durin
g-economic-recessions/?
sh=26f948726852
Activity

Match the following

1. Global Financial Crisis A. 1973

2. Great Depression B. 2008-09

3. The Asian Crisis C. 1929-1940

4. OPEC Price Shock D. 1997