The possibility for recipients of funds in foreign countries to engage in riskier behavior after receiving financing is called

Question

Quizplus · Accepted Answer

Moral hazard refers to the possibility that individuals may take on higher levels of risk or engage in riskier behavior once they receive financing, knowing that the lender or funder will be responsible for any negative outcomes. This can be a concern for international development programs and other forms of foreign aid, as recipients may not have the same incentives to use the funds responsibly as they would if the money came from their own resources. Inequitable financing, adverse selection, and asymmetric information are related concepts but do not specifically address the issue of moral hazard.

The Possibility for Recipients of Funds in Foreign Countries to Engage