credit standards (3)

however ,this is this time when banks are at their most defensive , chastened by their own losses and more likely to be risk averse as opposed to risk aware . This is when the loan conditions are tightened beyond what is reasonable or the banks simply refuse to lend .sometimes they almost actually add to losses by refusing to support battered but fundamentally sound companies that could recover if only they had sufficient finance . it is difficult ,but necessary,to remain objective.
In the past,lending skills were regarded as essential for all bankers and and the most senior members of a bank is management would have them. Times have changed and the credit function within banks is usually one of the less glamorous places to work lending is often regarded as 'value destroying' because of the amount of scarce capital it uses and business that generates fees and other non-interest income is seen as more attractive .The problem with this is that customers have a need to borrow . maybe the bigger ones can access capital markets direct through bond issues or commercial paper , but there is a lot of research to show that the service that most customers-especially business ones - most value from their banker is the willingness to grant credit.