Discuss Two Ways in Which a Bank Can Mitigate the Problem

question 16

Essay

Discuss two ways in which a bank can mitigate the problem of moral hazard when lending money to a company.

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Definitions:

Problematic Behavior

Actions or behaviors that are harmful or difficult for the individual or others, often disrupting normal functioning.

Maintenance Stage

The phase in behavior change where an individual works to sustain the gains achieved after adopting new habits.

Tempting Situations

Circumstances that present a strong attraction or inclination to engage in a particular action, often one that might be considered unwise or harmful.

Maintenance Stage

In behavior change models, this stage refers to the sustained effort to avoid relapse and consolidate the gains achieved during the action stage.