Materiality and Loan transferability: Difference between pages

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This is a threshold at which insignificance becomes significance.
A feature of loan documentation, giving lenders the right to transfer the loan to a different lender.


Often it is defined for particular circumstances in loan agreements, for example cross default shall not apply for late payment of a trade creditor for an amount less than a given threshold figure.
Lenders value loan transferability, as it gives them the flexibility to manage their balance sheets by fine-tuning their asset portfolios to meet capital adequacy requirements, or for other purposes.


Materiality is also a fundamentally important concept in financial accounting.
Relevant accounting standards, principles and disclosures need only be applied to material items.
Similarly in risk management, only material risks require active management.  (While non-material risks can be retained and monitored periodically to ensure that they remain non-material.)




== See also ==
== See also ==
* [[Cross default]]
* [[Assignment]]
* [[Default]]
* [[Capital adequacy]]
* [[Loan agreement]]
* [[Documentation]]
* [[Guide to risk management]]
* [[Loan]]
* [[Novation]]
* [[Portability]]
* [[Sub-participation]]
* [[Transferee]]


[[Category:Accounting,_tax_and_regulation]]
[[Category:Accounting,_tax_and_regulation]]
[[Category:The_business_context]]
[[Category:The_business_context]]
[[Category:Corporate_finance]]
[[Category:Identify_and_assess_risks]]
[[Category:Manage_risks]]
[[Category:Risk_frameworks]]
[[Category:Risk_reporting]]

Revision as of 16:20, 4 December 2023

A feature of loan documentation, giving lenders the right to transfer the loan to a different lender.

Lenders value loan transferability, as it gives them the flexibility to manage their balance sheets by fine-tuning their asset portfolios to meet capital adequacy requirements, or for other purposes.


See also