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Consider the high-risk borrowing practices that led to the recent recession.
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If the consumers have highly borrowing behavior with high interest rates offer, they may be high-risk borrowers and banks may face an adverse selection problem.
Students are high-risk borrowers.
"A lot of people are purchasing rather speculative, high-risk stocks with borrowed money and that's a source of concern for me.
This was compounded by the criminal behavior of key financial players on Wall Street and corporate banks that encouraged massive speculative borrowing and high-risk lending practices.
The Limited has made spectacular use of leverage, the high-risk strategy whereby companies use borrowed money to finance acquisitions.
In years past, borrowing was a high-risk practice left to professional money managers.
NEW YORK TIMES Fed Is Said to Warn Banks on Underwriting Practices | Bloomberg News reports: "Top banking regulators in the U.S. are recommending lenders strengthen underwriting standards for leveraged corporate loans as borrowing of the high-risk debt approaches levels not seen since before the financial crisis, according to nine people with knowledge of the matter".
If not properly managed, systematic risk can lead to increases in risk aversion, implying higher risk premiums, borrowing costs, and lower economic growth.
Republicans and Democrats appeared no closer to ending the budget impasse and a high-risk clash over raising the government's borrowing authority.
These funds may involve high-risk, complex hedging and leverage strategies (using borrowed money) that you may not understand.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com