Final answer:
The bank requires a borrower to fill out forms regarding income sources and conducts a credit check. Requiring a cosigner or collateral can also provide reassurance to the bank.
Step-by-step explanation:
In the financial capital market, before a bank makes a loan, it requires a prospective borrower to fill out forms regarding income sources. The bank also conducts a credit check on the individual's past borrowing. One approach to reassure the bank is to require a cosigner on the loan, who legally pledges to repay some or all of the money if the original borrower fails to do so. Another approach is to require collateral, such as property or equipment, which the bank can seize and sell if the borrower defaults on the loan.