Our study of credit experience is necessarily based on cer- tain arbitrary assumptions. In the first place we have assumed that all loans can be divided into two mutually exclusive classes, one consisting of good loans with which the bank had no special collection difficulty, and one of bad loans which gave rise to one or more of the following collection prob- lems: the bank collected from a comaker; the bank took legal action; the loan was excessively delinquent;2 the bank charged off the loan.
