Why do loan sharks worry less about moral hazard in connections with their borrowers than some other

Question:

Why do loan sharks worry less about moral hazard in connections with their borrowers than some other lenders do?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Economics of Money, Banking and Financial Markets

ISBN: 978-0321598905

9th Edition

Authors: Frederic S. Mishkin

See More Books

Question Posted: Aug 12, 2012 04:13 AM

See More Questions

Moral Hazard versus Adverse Selection in Health Care Reform: We mentioned moral hazard only brieflyand primarily in the context of how this might aggravate the adverse selection problem. In this...
Why do both adverse selection and moral hazard mean that lunch insurance, which would pay for lunch if you choose to eat it, is never likely to be a commercial success?
Why don't borrowers and lenders interact directly? What are the advantages of using financial intermediaries?
The president has become discouraged with his current economic advisory team. He has searched the colleges and your name keeps coming up as one of the very best macroeconomic analysts in the country....
Why are steels more difficult to cast than cast irons?
Discuss the advantages of using PERT and potential sources of error. LO.1
8. What accounting and reporting methods are used by investor-venturers in accounting for their joint venture investments? E x E R c I S E S
The following circuit operates if and only if there is a path of functional devices from left to right. The probability that each device functions is as shown. Assume that the probability that a...
December 31, 2020 Debit Credit Cash $30,000 Accounts receivable 180,000 Supplies 35,000 Inventory 365,000 Land 420,000 Buildings 520,000 Accumulated depreciation, buildings $130,000 Accounts payable...
Calculate the effective value of the current waveform in Fig. 11.60 and the average power delivered to a 12- Î© resistor when the current runs through the resistor. i(t) A A 10 E 1015,20...
How can the adverse selection problem explain why you are more likely to make a loan to a family member than to a stranger?
If you are an employer, what kinds of moral hazard problems might you worry about with your employees?
How could you convert butanoic acid into the following compounds? Write each step showing the reagents needed. (a) 1 -Butanol (b) 1Bromobutane (c) Pentanoic acid (d) 1-Butenc (e) Octane
Arrow Company processes a food seasoning powder through its Compounding and Packaging departments. In the Compounding Department, direct materials are added at the beginning of the process, and...
The 2017 financial statements of LVMH Moet Hennessey Louis Vuitton S.A. are presented in Appendix C at the end of this book. LVMH is a Paris-based holding company and one of the world's largest and...
Repeat Problem 10.E1, except design a packed column using 1-in. metal Pall rings. Do the calculations at the top of the column. Approximate HETP for ethanol-water is $0.366 \mathrm{~m}$. At...
We are separating an ethanol-water mixture in a column operating at atmospheric pressure with a total condenser and a partial reboiler. Constant molal overflow (CMO) can be assumed, and reflux is a...
Corporate Social Responsibility Problem The Global Reporting Initiative (GRI) is a networkbased organization that has pioneered the development of the world's most widely used sustainability...
Is there a litigation culture developing in other regions of the world following US precedents? Is it a bad thing?
Keating & Partners is a law firm specializing in labour relations and employee-related work. It employs 25 professionals (5 partners and 20 managers) who work directly with its clients. The average...
Explain why the real interest rate is the opportunity cost of loanable funds.
If there is a decline in interest rate, which would you rather be holding long-term bonds or short-term bonds? Why? Which type of bond has the greater interest-rate risk?
If mortgage rates rise from 5% to 10% but the expected rate of increase in housing prices rises from 2% to 9%, are people more or less likely to but houses?
If mortgage rates rise from 5% to 10% but the expected rate of increase in housing prices rises from 2% to 9%, are people more or less likely to but houses?
Callaho Inc. began operations on January 1 , 2 0 1 8 . Its adjusted trial balance at December 3 1 , 2 0 1 9 and 2 0 2 0 is shown below. Other information regarding Callaho Inc. and its activities...
Required: 1. Complete the following: a. Colnpute the unit product cost under absorption costing. b. What is the company's absorption costing net operating income (loss) for the quarter? c. Reconcile...
Bond Valuation with Semiannual Payments Renfro Rentals has issued bonds that have an 8% coupon rate, payable semiannually. The bonds mature in 6 years, have a face value of $1,000, and a yield to...

Why do loan sharks worry less about moral hazard in connections with their borrowers than some other

Question:

Step by Step Answer:

Loan Sharks are the money lender in the market which offers loans at the highe...View the full answer

Economics of Money, Banking and Financial Markets

Students also viewed these Banking questions