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Question 3 a) Discuss the causes of credit risk. How credit risk is managed? How can a poor credit management become a source of systemic

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Question 3 a) Discuss the causes of credit risk. How credit risk is managed? How can a poor credit management become a source of systemic problems for a banking system? (13 points) b) Discuss a "lemon" problem in banking and securities market. Do You agree with a statement that the banks are more effective than other financial intermediaries in solving the problems arising out of the asymmetric information. (12 points)

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