Consumer Loans Surge Across Asia

[Fred]

A Wall-Street Journal article from yesterday: http://online.wsj.com/article/SB10001424127887323551004578436600864277108.html" class="bbc_link" target="_blank">http://online.wsj.com/article/SB10001424127887323551004578436600864277108.html

Banks From Around the World Target Middle Class With Financing for Autos, Home Appliances
...

Interest rates can range from 15% for secured auto loans to as much as 40% for unsecured loans, appliances and electronics, driven by high demand for loans and little or no credit history for the borrowers. Loans are typically paid back over six months to five years.

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40% interest?

Citibank is already on the ground; hopefully, P2P operators/investors are not too far behind.

One big challenge: not sure how complete & accurate their credit reporting agencies are.
 

[rawraw]

There is a reason those rates exist.

Be Fearful When Others Are Greedy and Greedy When Others Are Fearful

[TravelingPennies]

https://forum.lendacademy.com/index.php?topic=1008.msg6281#msg88888888Quote"> from: rawraw on April 22, 2013, 07:14:22 AM

[TravelingPennies]

You seem to use lots of finance buzz words, but not quite sure what you're actually saying.

[TravelingPennies]

I have graduate degrees in Finance and Engineering.

Based on your previous comments in this Forum, I assume you know efficient frontier from modern portfolio theory introduced by Harry Markowitz?

[TravelingPennies]

These credit card companies are not looking to capture beta risk on some efficient frontier with these 40% APR cards.  It's probably more along the lines of predatory lending and usury.

Systematic risk is a bore.  https://forum.lendacademy.com/Smileys/default/grin.gif" alt=";D" title="Grin" class="smiley" />

[ee1x]

https://forum.lendacademy.com/index.php?topic=1008.msg6350#msg88888888Quote"> from: Fred on April 23, 2013, 04:49:56 PM

[TravelingPennies]

People still believe in the old adage "not putting all of your eggs in one basket." 

Despite its shortcomings, MPT quantifies the benefits of diversification, also known as not putting all of your eggs in one basket.

[TravelingPennies]

I love covariance matrices.

[TravelingPennies]

https://forum.lendacademy.com/index.php?topic=1008.msg6389#msg88888888Quote"> from: Fred on April 24, 2013, 03:57:30 PM

[TravelingPennies]

Yeah my thoughts are aligned with ee1x. I don't understand how it relates. For example, Should we diversify across assets experiencing bubbles? Of course not. The theory tells you nothing about suitability of investments. I think it assumes all assets are  priced at fair value.

[TravelingPennies]

If you realize that some of these countries have double-digit inflation, a 40% interest is pretty much about 25% in the US.

I am fine if you see things differently about Asia.  However, I also see Citigroup, Crédit Agricole, Mizuho Financial, etc., are taking a keen interest in this opportunity.

"In China, Citigroup Inc., which became the first Western bank to issue its own credit cards there last year, is seeing one of its fastest growth rates in credit-card accounts in the world, a bank spokesman said."

"France's Crédit Agricole SA plans to expand its auto loans in the country by more than one-third this year ..."

I happen to be in Asia during the 2007 US sub-prime crisis.  I can tell you that the world is more financially connected that most people think.

[TravelingPennies]

I'm not saying it's a bad per se. Just saying there is a reason that needs to be understood beforehand. Banks in Africa have similar high returns. But to compare them to America, you couldn't compare banks but rather pay day lenders.

Sent from my SAMSUNG-SGH-I747 using Tapatalk 2

[TravelingPennies]

https://forum.lendacademy.com/index.php?topic=1008.msg6422#msg88888888Quote"> from: Fred on April 25, 2013, 07:00:56 PM

[TravelingPennies]

As I said before:

https://forum.lendacademy.com/index.php?topic=1008.msg6422#msg88888888Quote"> from: Fred on April 25, 2013, 07:00:56 PM