In article in the Wall Street Journal notes that online peer-to-peer lenders: "have automated the processes of 'hecking borrowers' credit metrics and looking up their histories while in many cases avoiding more labor-intensive ractices of collecting and reviewing pay stubs or tax returns." The article also notes that "Charge-off rates, which reflect loans on which a lender doesn't expect to collect, have risen..." Source: Telis Demos and Peter Rudegeair, "Lending Club's Newest Problem: Its Borrowers," Wall Street Joumal, July 12, 2016. Why do banks require borrowers to submit pay stubs and tax returns when applying for a loan? A. Requiring borrowers to submit pay stubs and tax returns serves as collateral on the borrower's loan. B. Reviewing pay stubs and tax returns allows lenders to determine which consumers need loans the most C. Pay stubs and tax returns allow lenders to gauge a borrower's ability to pay back the loan. D. The process of checking borrower's credit histories allows lenders to evaluate the amount of reserves to hold. Why would online lenders skip this step in the loan application process? A. Online lenders skip this step because gathering and reviewing information on borrowers is costly. B. They skip this step because pay stubs and tax returns are poor indicators of a borrower's ability to pay back a loan C. Skipping this step allows online lenders to charge a higher interest rate on loans than banks can charge. D. People who borrow from online lending sites are less likely to default on their loans. If online lenders find that borrowers are defaulting on loans at higher than expected rates, can they offset the problem by charging ingher interest rates on the loans? Briefly explain. B. Reviewing pay stubs and tax returns allows lenders to determine which consumers need loans the most. C. Pay stubs and tax returns allow lenders to gauge a borrower's ability to pay back the loan. D. The process of checking borrower's credit histories allows lenders to evaluate the amount of reserves to hold. Why would online lenders skip this step in the loan application process? A. Online lenders skip this step begause gathering and reviewing information on borrowers is costly. B. They skip this step because pay stubs and tax returns are poor indicators of a borrower's ability to pay back a loan. C. Skipping this step allows online lenders to charge a higher interest rate on loans than banks can charge. D. People who borrow from online lending sites are less likely to default on their loans. If online lenders find that borrowers are defaulting on loans at higher than expected rates, can they offset the problem by charging higher interest rates on the loans? Briefly explain. A. Yes, because borrowers are paying higher interest rates, they will be more likely to pay back their loans faster: B. No, because only the most high-risk borrowers will accept loans, meaning the borrower is more likely to default: C. Yes, any time lenders charge a higher interest rate, it allows them to offset higher default rates. D. No, borrowers will realize they are being exploited by online lenders and instead borrow money from banks. In article in the Wall Street Journal notes that online peer-to-peer lenders: "have automated the processes of 'hecking borrowers' credit metrics and looking up their histories while in many cases avoiding more labor-intensive ractices of collecting and reviewing pay stubs or tax returns." The article also notes that "Charge-off rates, which reflect loans on which a lender doesn't expect to collect, have risen..." Source: Telis Demos and Peter Rudegeair, "Lending Club's Newest Problem: Its Borrowers," Wall Street Joumal, July 12, 2016. Why do banks require borrowers to submit pay stubs and tax returns when applying for a loan? A. Requiring borrowers to submit pay stubs and tax returns serves as collateral on the borrower's loan. B. Reviewing pay stubs and tax returns allows lenders to determine which consumers need loans the most C. Pay stubs and tax returns allow lenders to gauge a borrower's ability to pay back the loan. D. The process of checking borrower's credit histories allows lenders to evaluate the amount of reserves to hold. Why would online lenders skip this step in the loan application process? A. Online lenders skip this step because gathering and reviewing information on borrowers is costly. B. They skip this step because pay stubs and tax returns are poor indicators of a borrower's ability to pay back a loan C. Skipping this step allows online lenders to charge a higher interest rate on loans than banks can charge. D. People who borrow from online lending sites are less likely to default on their loans. If online lenders find that borrowers are defaulting on loans at higher than expected rates, can they offset the problem by charging ingher interest rates on the loans? Briefly explain. B. Reviewing pay stubs and tax returns allows lenders to determine which consumers need loans the most. C. Pay stubs and tax returns allow lenders to gauge a borrower's ability to pay back the loan. D. The process of checking borrower's credit histories allows lenders to evaluate the amount of reserves to hold. Why would online lenders skip this step in the loan application process? A. Online lenders skip this step begause gathering and reviewing information on borrowers is costly. B. They skip this step because pay stubs and tax returns are poor indicators of a borrower's ability to pay back a loan. C. Skipping this step allows online lenders to charge a higher interest rate on loans than banks can charge. D. People who borrow from online lending sites are less likely to default on their loans. If online lenders find that borrowers are defaulting on loans at higher than expected rates, can they offset the problem by charging higher interest rates on the loans? Briefly explain. A. Yes, because borrowers are paying higher interest rates, they will be more likely to pay back their loans faster: B. No, because only the most high-risk borrowers will accept loans, meaning the borrower is more likely to default: C. Yes, any time lenders charge a higher interest rate, it allows them to offset higher default rates. D. No, borrowers will realize they are being exploited by online lenders and instead borrow money from banks