The moral hazard problem of banks is caused by the fixed insurance premiums paid by banks which make them accept greater risk.

Name: The moral hazard problem of banks is caused by the fixed insurance premiums paid by banks which make them accept greater risk.
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Fixed insurance premiums encourage banks to take greater risks because they are not incentivized to minimize risk in order to reduce their insurance costs. This is known as moral hazard.

The Moral Hazard Problem of Banks Is Caused by the Fixed