One of the reasons why banks might refuse to lend a loan is the lack of ____ as a security against the loan.

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Detailed Solution

One of the reasons why banks might refuse to lend a loan is the lack of collateral as a security against the loan.
For a few reasons, banks might be unwilling to lend loans to some borrowers:
1)      Banks need proper documentation and collateral against a loan, and some people might fail to meet these requirements.
2)      If a person has failed to repay a previous loan, banks don't prefer to lend them further.
3)      Banks are not willing to lend to an entrepreneur with a high-risk venture. That is because there is less certainty of payback on loans.
One of the main objectives of a bank is to earn profits, and for this reason, banks prefer to adopt reasonable loan and investment policies to ensure fair and stable returns.

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