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GLOSSARYTERMS AS A CREDIT DESK USES THEM

The Three Questions

What are the three questions underneath every credit decision?

ONE OF 80 TERMS · FREE · NO SIGNUP

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED

// THE SHORT ANSWER

The Three Questions sit underneath every credit decision, before any technique is reached for. Will I get paid back — whether the borrower has the cash flows, assets and resilience to repay in full and on time. Am I being paid enough for the risk — not whether the spread is adequate in isolation, but whether the whole return justifies this use of the bank's capacity against its alternatives. Can I get out if I'm wrong — because no banker is right every time, and a banker who has answered the first question well but never asked the third has done half the analysis. Every framework in the book is one of the three, worked out in a particular setting.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.

// IN THE BOOK

Developed in chapter 1, Why Bankers Think Differently.

IN FULLthe parts, the ruling, and where it is worked

// WORKED IN

// NEXT TO IT

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