The moral hazard problem refers to the incentive created by fixed rate deposit insurance for bank managers to take excessive risk.

Name: The moral hazard problem refers to the incentive created by fixed rate deposit insurance for bank managers to take excessive risk.
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The moral hazard problem arises because fixed rate deposit insurance reduces the financial consequences for bank managers if their risky investments fail, thereby encouraging them to take on greater risks than they might otherwise.

The Moral Hazard Problem Refers to the Incentive Created by Fixed