Moral Hazard
When one takes on more risk, expecting not to bear full consequences.
Detailed Description
Moral Hazard
What is moral hazard?
Moral hazard is a situation where one party takes risks because they do not bear the full consequences of their actions.
What are some causes of moral hazard?
Causes include insurance or guarantees, asymmetric information, and lack of regulatory oversight.
How does moral hazard impact regulatory compliance?
It undermines regulatory frameworks, leading to increased fraud, financial instability, and erosion of trust.
What are some examples of moral hazard in real estate?
Examples include property developers cutting corners, landlords neglecting repairs, and mortgage lenders approving risky loans.
What strategies can mitigate moral hazard?
Strategies include enhancing transparency, stricter regulatory measures, and fostering a culture of accountability.