A bank usually treats the moral hazard problem by using all of the following, except:

Name: A bank usually treats the moral hazard problem by using all of the following, except:
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Not making loans is not a solution to the moral hazard problem as it would negatively affect the bank's profitability and ability to generate revenue. The other options listed (requiring collateral, requiring down payments, and restrictive covenants) are all methods that a bank can use to mitigate the moral hazard problem.

A Bank Usually Treats the Moral Hazard Problem by Using