Asymmetric information problems increase costs to both borrowers and lenders.

Name: Asymmetric information problems increase costs to both borrowers and lenders.
Brand: Quizplus
Rating: 4.8 (42 reviews)

Question

Quizplus · Accepted Answer

Asymmetric information problems, such as adverse selection and moral hazard, increase uncertainty and risk for both borrowers and lenders, leading to higher costs. Lenders may increase interest rates to mitigate risks, and borrowers may face higher costs in demonstrating their creditworthiness.

Asymmetric Information Problems Increase Costs to Both Borrowers and Lenders