If depository insurance exists,bank managers may make riskier loans than they would have otherwise,which is an example of

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Moral hazard refers to the idea that individuals or institutions may take on more risk than they otherwise would because they know they are protected from losses. In this case, with depository insurance in place, bank managers may feel more comfortable taking on riskier loans because they know they won't suffer significant losses if those loans fail.

If Depository Insurance Exists,bank Managers May Make Riskier Loans Than