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In 2011 The Global Retail Lending Market Grew to Reach a Value of $32,916.3 billion
Apart from a brief deceleration at the height of the global recession, the global retail lending market has remained buoyant and relatively stable. The retail lending market is intrinsically linked to current economic condition. When economic circumstances are stable, institutions generally increase their lending rate, while the reverse is true in times of poor performance.
The global retail lending market grew by 3.8% in 2011, to reach a value of $32,916.3 billion, representing a compound annual growth rate (CAGR) of 2.7% for the period spanning 2007-2011.
The United States dominates the global retail lending market, holding a market value over four times those of its closest rival markets, Japan and the UK.
Mortgage lending forms the largest segment within the global retail lending market, contributing over 75% of the market’s total value.
Issues prevalent within the banking industry will have a significant effect on the retail lending market. The European Sovereign Debt Crisis is crucial to the on-going future of many countries’ banking industry groups. Though pressures have been alleviated to an extent by the actions of the European Central Bank, the issue remains a substantial threat to many industry players’ continued stability.
The global economic crisis of 2008-2009 exposed the frailty of the most common retail lending models. Retail lending has changed dramatically in the last couple of decades, moving from a largely intuitive process to an increasingly automated one. With automation comes the danger of rapidly magnifying problems, as demonstrated by the US mortgage crisis. Reliance on weak, out-dated models can create portfolio disasters. However, not all prevalent models employed by market leaders failed during the crisis. In view of this, a redesign of models used by market players seems inevitable.
Trust in banking institutions continues to falter with the recent emergence of a rate fixing scandal. According to The Financial Times, regulators are focusing on at least four of Europe’s biggest banks as they investigate the attempted manipulation of the region’s benchmark interest rate. Regulators suspect Barclays’ traders were the instigators of a group that included Crédit Agricole, HSBC, Deutsche Bank, and Société Générale. This lack of trust in banks may result in a lower demand for services.