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Does loan structuring affect a bank's expected default losses on a loan?

Does loan structuring affect a bank's expected default losses on a loan?

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Loan structuring affects a bank's expected default losses on a loan. Loan structure has three basic features to it namely, how the loan is to be paid back (in installments or in lump sum payment), the loan is secured or not and if the interest rate is fixed or variable. Expected default loss is Loss Given Default meaning how much will the bank lose in case of a default. Depending upon whether the loan has a collateral to it or not, the recovery for the bank will vary. Thus, loan structuring very much affects the expected loss on a loan in case of a default.

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