If the banking industry is unable to review a borrower's credit history,then the market will experience failure caused by
A) imperfect information.
B) public goods.
C) perfect information.
D) imperfect competition.

Question

Quizplus · Accepted Answer

The inability to review a borrower's credit history implies a lack of complete and accurate information, resulting in imperfect information. Without access to reliable data, the lender may not be able to assess the borrower's creditworthiness and risk level properly, leading to adverse selection and moral hazard problems. As a result, the market for credit may fail to allocate resources efficiently, causing market failure.

If the Banking Industry Is Unable to Review a Borrower's