Tag: Adverse Selection

Preventing Adverse Credit Selection At Banks

Earlier this week, we discussed why community banks need more granularity in their credit grades in order to compete with more sophisticated banks (HERE). Our example focused on just the credit and loan loss allowances between a set of loans that were all rated with a  credit grade four by one bank as we showed what happens over the course of a quarter when they have to compete. We stopped short on pricing, which is our topic today.

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