University of the PeopleBUSINESS B1115

Every manager has different skills, and specialties of expertise. It is quite possible that you could be in a situation where you see something that someone else does not see, especially if they are working under you with less education or experience than you. 

If a loan officer working under you recommends a loan to a customer, describe:

(A) when you would authorize that loan, and

(B) when you would deny the loan in each of the following cases and give your rationale.

 

1. You disagree with your subordinate because you do not think restaurants are good investments in general, so you have a bad feeling about this customer's ability to repay the loan based on your experience with the market rather than any financial facts.
2. You disagree with your subordinate because you think medical operations are high risk for legal problems, so you have a bad feeling about this customer's ability to repay the loan based on your experience with the law rather than any financial facts.
3. You disagree with your subordinate because you think members of their family are business failures, so you have a bad feeling about this customer's ability to repay the loan based on your experience with social history rather than any financial facts.
4. You disagree with your subordinate because you just have a bad feeling about this customer's ability to repay the loan based on your gut instinct rather than any financial facts.

Answers:

1.) You disagree with your subordinate because you do not think restaurants are good investments in general, so you have a bad feeling about this customer's ability to repay the loan based on your experience with the market rather than any financial facts.

Loan in this case can be authorized based on certain factors and the primary factor that the organization needs to possess is sustainability in the industry and the time that the organization has been there in the market because the rate of failure in case of restaurants are high, hence the restaurant in this case has to be there in the market and has to be a profitable business so that they are able to pay back the loan. The organization needs to have certain security factors as well so that if they are unable to pay back the loan we can use their security investments to retrieve the same.

2.) You disagree with your subordinate because you think medical operations are high risk for legal problems, so you have a bad feeling about this customer's ability to repay the loan based on your experience with the law rather than any financial facts.

There is no doubt in the fact that medical operation are very high risk incidents and hence in order to approve a loan in this case because the law is quite complicated. Hence I believe Loan can be approved but for that the individual needs to take up a legal agreement which will state that the person promise to pay the sum even at any cost even if the situation of the patient do not improve after the operation.

3.) You disagree with your subordinate because you think members of their family are business failures, so you have a bad feeling about this customer's ability to repay the loan based on your experience with social history rather than any financial facts.

I believe that family history should not be considered as an important factor in this case and instead of that the business plan and idea of the business needs to be evaluated based on which the loan can be approved to the individual so that the business can succeed in this case. While approving the loan we need to evaluate the options that the individual possess in case of a failure which can be used to reimburse the loss that is incurred.

4.) You disagree with your subordinate because you just have a bad feeling about this customer's ability to repay the loan based on your gut instinct rather than any financial facts.

I believe that we should not believe and rely on our instincts because it may happen that the instincts are wrong and hence we need to be effective enough so that we can think of better logical and statistical options that will make the reasoning based on facts and not on instincts because it is unfair and not at all justified.

Again,

It is necessary to do a financial analysis and understand the market in the situation of providing loan for restaurants. If the applicant has a good history and a strong profile with financial assets then it would not be a problem for providing loan.

In the next situation where medical operations are a high risk for legal problems it will be a wise decision to not grant loan. Granting loans are also based on the risk factor and High risk factor will not be ideal choice for loans. However it is important to do a thorough check with financial facts before providing any decision.

The case wherein members of the family are business failures and you think that they don't have the ability to pay loan just based on the social history should not be considered.

It is important that you based your decisions with the financial facts of the client since in providing loan, the capability of the applicant needs to be taken into account.

Also the guaranters play an important part in the loan application process. If the applicant has strong financial assets then it should not be a problem. And lastly, loan is not based on gut instinct but financial analysis and facts.