Because of the adverse selection problem,lenders may refuse loans to individuals with low net worth.

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Adverse selection refers to the tendency for high-risk individuals to be more likely to apply for loans, and lenders may refuse loans to these individuals due to the higher risk of default. This can lead to a situation where individuals with lower net worth have difficulty obtaining loans even if they are capable of repaying them.

Because of the Adverse Selection Problem,lenders May Refuse Loans to Individuals