Credit Environment

Abstract

‘Credit Environment’ is important in determining the availability and the terms of loans to the credit seekers. A well-managed financial system is essential for a sound and fool-proof credit environment. Macro and micro economic indicators as also the external conditions prevailing in the market influence the credit environment. Regulatory policies and the monetary policies of the Government and the Central Bank contribute to a major extent to the credit environment of any country. In the absence of a tight credit environment, lenders may offer credit to the borrowers with lower credit worthiness. The sub-prime crisis and the financial meltdown in 2008 is a case of lending credit to the borrowers with a poor credit record.