But perhaps the debt overhang points to a deeper cause; the debt-fueled demand before the Great Recession, which has led to the debt overhang now, hid a fall in global potential growth, perhaps because of the difficult-to-understand consequences of population ageing across the industrial world, and the slowdown in productivity growth.
The sub-prime crisis in the USA is the most recent example of the inadequate credit risk assessment. The advent of advanced approaches for credit risk in India under the Basel II Framework in the days to come, could be expected to provide an impetus for adopting more sophisticated credit risk management techniques in banks. 18.