One of the reasons for the failure of Canadian Commercial and Northland banks was ________.

Question

Quizplus · Accepted Answer

Moral hazard occurs when one party to a transaction has an incentive to take excessive risks because the other party bears the costs of those risks. In the case of Canadian Commercial and Northland banks, the banks had an incentive to take excessive risks because they were not required to hold sufficient capital to cover potential losses. This led to the failure of the banks when they were unable to meet their obligations to depositors.

One of the Reasons for the Failure of Canadian Commercial