(Solved):The term “moral hazard” describes increases in risky behavior resulting from efforts to make that behavior safer. How does the concept of moral hazard apply to deposit insurance and other bank regu… View Answer…

 

Question

The term “moral hazard” describes increases in risky behavior resulting from efforts to make that behavior safer. How does the concept of moral hazard apply to deposit insurance and other bank regulations?

 

EXPERT ANSWER

When it comes to depositing insurance, the risk of the entire deposits of the concerning banks is accommodated by the Federal Deposit Insurance Corporation which guarantees up to $250,000 bank deposits, which pays the insurance premium. In this

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