Banks reduce by screening .
A)moral hazard; potential borrowers
B)adverse selection; savers
C)adverse selection; potential borrowers
D)irrational exuberance; depositors

Question

Quizplus · Accepted Answer

Banks reduce adverse selection by screening potential borrowers. This means they evaluate the creditworthiness of potential borrowers to ensure they are likely to repay loans. By doing so, they reduce the risk of lending to high-risk borrowers who are more likely to default on their loans, which would result in losses for the bank.

Banks Reduce by Screening