Unanticipated moral hazard contingencies can be reduced by
A)screening.
B)long-term customer relationships.
C)specialization in lending.
D)credit rationing.

Question

Quizplus · Accepted Answer

Long-term customer relationships can reduce unanticipated moral hazard contingencies, as the lender has a better understanding of the customer's behavior and is more likely to detect any attempts to engage in unethical behavior. Screening can help to reduce adverse selection, but it may not necessarily prevent unanticipated moral hazard contingencies. Specialization in lending can help lenders to better understand the risks involved in lending to certain borrowers, but it may not fully address the issue of unanticipated moral hazard contingencies. Credit rationing, on the other hand, can limit the availability of credit to certain borrowers, but it does not directly address the issue of reducing unanticipated moral hazard contingencies.

Unanticipated Moral Hazard Contingencies Can Be Reduced by