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You have recently been appointed as a lending officer in the commercial division of a major bank. The bank is concerned about lending in the
You have recently been appointed as a lending officer in the commercial division of a major bank. The bank is concerned about lending in the current economic environment, where there has been an economic downturn.
Required:
1)Please identify all the agency problems the bank should be concerned with.
2)Please explain how covenants in debt agreements and accounting information can be used to reduce each of those agency problems respectively.
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