The Role of Collateralized Lending in the Global Financial Crisis

Most lending up until the global financial crisis in 2008 was non-collateralized. The vast majority of lending now is collateralized or secured lending. So there's some asset behind the loan. Now that means that you can then differentiate forms of collateral between as I say good collateral which tends to be government securities. And bad collateral which may be fact or maybe instruments that will fluctuate significantly in value and therefore the lender will provide a large haircut on those asset values if they want to lend to you.