It is often said that bank managers have unlimited upside and limited downside.In other words,banks and other financial intermediaries can experience significant ________ problems.

Question

Quizplus · Accepted Answer

Moral hazard refers to the situation where one party takes on risk because they know they won't have to bear the full consequences of their actions, which is applicable to bank managers who may take excessive risks knowing they have limited downside.

It Is Often Said That Bank Managers Have Unlimited Upside