The Possibility That a Borrower Might Engage in Riskier Behavior

question 420

Multiple Choice

The possibility that a borrower might engage in riskier behavior after a loan has been obtained is

• A) asymmetric information.
• B) adverse selection.
• C) moral hazard.
• D) financial intermediation.

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Definitions:

Power Distance

The extent to which people in different societies accept the way power is distributed.

Hofstede's Dimensions

A framework for understanding and comparing national cultures across six dimensions: power distance, individualism vs. collectivism, masculinity vs. femininity, uncertainty avoidance, long-term orientation, and indulgence vs. restraint.

Fragmented Culture

A situation in which a workplace or community is divided into separate and often conflicting groups with differing values or beliefs.

Socializing

The process of learning and adapting to organizational norms, values, and cultures by individuals or groups.