How can moral hazard be avoided in the financial sector in future?
Finance is acknowledged as a unique field of education that incorporates full financial highlights such as an expenditure, credit rating, financial inclusion, and economic crisis. Corporate, public, and personal finance are the departments of finance.
Answer and Explanation:
Moral hazard in the finance sector can be avoided by enforcing the guidelines for those who are working in the finance sector, which should be clear to everyone, along with that other technique such as a seminar on moral values can also help to guide the behavior of people. Rule and regulations can also be implemented to avoid moral hazard in the finance sector. Another method is to develop a surveillance body that can supervise the functioning of the financial industry.
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Learn more about this topic:
from Corporate Finance: Help & ReviewChapter 8 / Lesson 7