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Full explaination on Tools to Help Solve Moral Hazard in Debt Contracts: 1. Net Worth and Collateral 2. Monitoring and Enforcement of Restrictive Covenants a)Covenants

Full explaination on Tools to Help Solve Moral Hazard in Debt Contracts:

1. Net Worth and Collateral

2. Monitoring and Enforcement of Restrictive Covenants

a)Covenants to discourage undesirable behavior.

b) Covenants to encourage desirable behavior.

c) Covenants to keep collateral valuable.

d) Covenants to provide information.

3. Financial Intermediation

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