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- Title
RISKS IN HOUSING FINANCE THE COMMERCIAL BANKS EXPOSED TO - AN OVERVIEW.
- Authors
RAJU, D.
- Abstract
Housing finance by the commercial banks is exposed to various types of risks. All types of loans\advances in general and housing finance in particular involve a variety of risks. The risks that the commercial banks are exposed to in financing housing is unique, in the sense that the lending spreads over a period of 5 - 25 years which is long period and identifying the risks involved is very difficult. In fact inappropriate advances, pricing and risk management in home loans can create a problem for the broader financial systems. The risk in housing finance triggers systemic risks which lead to major financial crisis globally. In fact the problem in the housing mortgage market has been identified as one of the important causes of the financial crisis of 2008-09. In most of the developed economies, during this period most of the banks and other financial institutions financing housing started facing significant losses on their investment in housing mortgagees and related securities in 2007. These losses triggered full blown financial crisis. The financial turmoil so created has been widely considered the primary cause of the economic recession that began in late 2007. It is therefore the need of the hour, to identify the major risks in general and operational risks in particular in housing finance, and review the management of the risks.
- Subjects
HOUSING finance; MORTGAGE loans; BANK loans; OPERATIONAL risk; BANKING industry
- Publication
CLEAR International Journal of Research in Commerce & Management, 2013, Vol 4, Issue 3, p129
- ISSN
2249-4561
- Publication type
Article