Credit risk primarily stems from traditional lending practices, such as corporate bonds and consumer loans, where the risk lies in nonrepayment, slow repayment, disputes, and other frictional costs.

Leasing transactions, while involving potential nonpayment and costs associated with recovering leased assets, pose minimal credit risk due to the guaranteed insurance provided by insuring institutions.

Deposits in banks are entirely risk-free, as they typically offer full insurance coverage, ensuring no exposure to credit risk for depositors.