Final answer:
Banks in the financial capital market require income information, a credit check, and sometimes a cosigner or collateral before issuing a loan to mitigate repayment risks.
Step-by-step explanation:
When engaging with financial capital markets, banks have instituted several key requirements before approving a loan to manage risk and ensure repayment. Upon receiving a loan application, a bank will first require the prospective borrower to detail their sources of income and conduct a credit check to assess the borrower's credit history and repayment behavior. Should there be concern regarding the borrower's ability to repay, banks may ask for a cosigner — an additional party who agrees to cover the debt if the original borrower defaults. Another risk mitigation strategy is to secure collateral, such as property or equipment, which the bank has the right to seize and sell in the event of non-repayment.