A problem with the too-big-to-fail policy is that it ________ the incentives for ________ by big banks.

A) decreases; adverse selection

B) decreases; moral hazard

C) increases; adverse selection

D) increases; moral hazard

The answer is D but I chose B....

Too big to fall is the government give the protection of the Financial institutions so that it will let fewer people to pay attention to the institutions..

So why choose increase the incentives?