The modern paradigm of borrowing as a lesson learned during the global financial crisis

Authors

  • George W. Kester Washington and Lee University
  • Goran Radivojac Faculty of Economics, University of Banja Luka

DOI:

https://doi.org/10.7251/ACE1318239K

Keywords:

debt, banks in the Republic of Srpska, 5C

Abstract

According to data published by the Statistical Office of the Republic of Srpska, Gross Domestic Product (GDP) of the Republic of Srpska recorded a negative growth rate of 0.9% in the third quarter of the year 2012. compared to the same period of the year 2011. This continued a decline in GDP, which is recorded in two quarters of the 2012. On the other hand, a report by the Statistical Office said that the greatest GDP growth occurred in financial intermediation by 7.6%, which is explained by increased public sector demand for money in order to finance the current budget deficit. Consequently, in practice, we often hear same question in context of the borrowing dilemma - where are the limits of borrowing? Simplified approach in seeking answers to the previous question suggests that the borrowing capacity depends on the estimated value of the collateral of credit arrangement. However, the answer to this question should be sought thorough the analysis of the borrowers cash ?ows (in?ows and out?ows), and on the basis of such results we have to do serious examination of the abilities of borrowers capacity to repay their loans from cash ?ows in the future period of time.

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References

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Published

2013-02-28

How to Cite

Kester, G. W., & Radivojac, G. (2013). The modern paradigm of borrowing as a lesson learned during the global financial crisis. Acta Economica, 11(18), 239–252. https://doi.org/10.7251/ACE1318239K

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Section

Review article