▶ Your Answer :
With a better access of mortgage, an increasing amount of individual debt has been regarded as one of primary reasons for reduced vitality of national economy. Regarding this, both of institutions and individuals cannot be absolved from all responsibilities.
Customary practices of financial institutions should be responsible for the high level of personal debt. This is because the regulations of judgment on loan were not controlled strictly through objective estimation and there was a tendency that many governments and financial firms did not consider the potential threat of credit bubble seriosuly. The subprime mortgage case in the US would be an obvious example. Prior to the credit bubble burst, although many experts critiziced the banks for being imprudent in their mortgage, they did disregard the advice. As a consequence of this, many giant firms and individuals went to bankrupt and many goverments had to pour public money to recover the national economy finally.
Another considerable contributor of increasing personal debt is individuals themselves. They should not shrink from their monetary responsibility as the individuals were the decision makers who applied for a loan. In this regard, they had to take into account in borrowing money seriously based on their income and debt and fostering thrift and saving should have been emphasized rather than depending on a secured loan. Therefore, soaring amounts of indebtedness is significantly related to those people who have taken out an excessive credit loan.
For these reasons mentioned above, we cannot ascribe this high level of indebtedness to a single institution or an individual. Against this backdrop, to reduce accumulated debts, comprehensive approaches should be implemented such as promoting strategic and intensive loan regulation for borrowers and wise and prudent consumption for every single person.
|