Moral Hazard

Moral Hazard
Author: Juan Flores Zendejas
Publisher: Routledge
Total Pages: 167
Release: 2021-12-30
Genre: Business & Economics
ISBN: 1000515028
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Moral Hazard is a core concept in economics. In a nutshell, moral hazard reflects the reduced incentive to protect against risk where an entity is (or believes it will be) protected from its consequences, whether through an insurance arrangement or an implicit or explicit guarantee system. It is fundamentally driven by information asymmetry, arises in all sectors of the economy, including banking, medical insurance, financial insurance, and governmental support, undermines the stability of our economic systems and has burdened taxpayers in all developed countries, resulting in significant costs to the community. Despite the seriousness and pervasiveness of moral hazard, policymakers and scholars have failed to address this issue. This book fills this gap. It covers 200 years of moral hazard: from its origins in the 19th century to the bailouts announced in the aftermath of the COVID-19 outbreak. The book is divided into three parts. Part I deals with the ethics and other fundamental issues connected to moral hazard. Part II provides historical and empirical evidence on moral hazard in international finance. It examines in turn the role of the export credit industry, the international lender of last resort, and the IMF. Finally, Part III examines specific sectors such as automobile, banking, and the US industry at large. This is the first book to provide an interdisciplinary analysis of moral hazard and explain why addressing this issue has become crucial today. As such, it will attract interest from scholars across different fields, including economists, political scientists and lawyers.

Moral Hazard

Moral Hazard
Author: Fouad Sabry
Publisher: One Billion Knowledgeable
Total Pages: 579
Release: 2024-02-03
Genre: Business & Economics
ISBN:
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What is Moral Hazard The term "moral hazard" refers to a circumstance that occurs in the field of economics and describes a situation in which an economic actor has an incentive to expand its exposure to risk because it does not face the full costs of that risk. As an illustration, when a company is insured, it may be willing to take on additional risk since it is aware that its insurance will cover the costs connected with the risk. It is possible for a moral hazard to take place when, after a financial transaction has taken place, the actions of the party that is taking the risk change in a way that is detrimental to the party that is suffering the costs. How you will benefit (I) Insights, and validations about the following topics: Chapter 1: Moral hazard Chapter 2: Economic bubble Chapter 3: Debt Chapter 4: Contract theory Chapter 5: Adverse selection Chapter 6: Information asymmetry Chapter 7: Savings and loan crisis Chapter 8: Asset-backed security Chapter 9: Mortgage loan Chapter 10: Subprime mortgage crisis Chapter 11: Flight-to-quality Chapter 12: Subordinated debt Chapter 13: Subprime crisis impact timeline Chapter 14: Credit crunch Chapter 15: Subprime crisis background information Chapter 16: Interbank lending market Chapter 17: Government policies and the subprime mortgage crisis Chapter 18: Subprime mortgage crisis solutions debate Chapter 19: Securitization Chapter 20: Financial fragility Chapter 21: 2007-2008 financial crisis (II) Answering the public top questions about moral hazard. (III) Real world examples for the usage of moral hazard in many fields. Who this book is for Professionals, undergraduate and graduate students, enthusiasts, hobbyists, and those who want to go beyond basic knowledge or information for any kind of Moral Hazard.

The Handbook of the Economics of Corporate Governance

The Handbook of the Economics of Corporate Governance
Author: Benjamin Hermalin
Publisher: Elsevier
Total Pages: 762
Release: 2017-09-18
Genre: Business & Economics
ISBN: 0444635408
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The Handbook of the Economics of Corporate Governance, Volume One, covers all issues important to economists. It is organized around fundamental principles, whereas multidisciplinary books on corporate governance often concentrate on specific topics. Specific topics include Relevant Theory and Methods, Organizational Economic Models as They Pertain to Governance, Managerial Career Concerns, Assessment & Monitoring, and Signal Jamming, The Institutions and Practice of Governance, The Law and Economics of Governance, Takeovers, Buyouts, and the Market for Control, Executive Compensation, Dominant Shareholders, and more. Providing excellent overviews and summaries of extant research, this book presents advanced students in graduate programs with details and perspectives that other books overlook. Concentrates on underlying principles that change little, even as the empirical literature moves on Helps readers see corporate governance systems as interrelated or even intertwined external (country-level) and internal (firm-level) forces Reviews the methodological tools of the field (theory and empirical), the most relevant models, and the field’s substantive findings, all of which help point the way forward

Moral Hazard and Capital Structure Dynamics, Second Version

Moral Hazard and Capital Structure Dynamics, Second Version
Author: Mathias Dewatripont
Publisher:
Total Pages: 55
Release: 2003
Genre:
ISBN:
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We base a contracting theory for a start-up firm on an agency model with observable but nonverifiable effort, and renegotiable contracts. Two essential restrictions on simple contracts are imposed: The entrepreneur must be given limited liability, and the investor's earnings must not decrease in the realized profit of the firm. All message game contracts with pure strategy equilibria (and no third parties) are considered. Within this class of contracts/equilibria, and regardless of who has the renegotiating bargaining power, debt and convertible debt maximize the entrepreneur's incentives to exert effort. These contracts are optimal if the entrepreneur has the bargaining power in renegotiation. If the investor has the bargaining power, the same is true unless debt induces excessive effort. In the latter case, a non-debt simple contract achieves efficiency; the non-contractibility of effort does not lower welfare. Thus, when the non-contractibility of effort matters, our results mirror typical capital structure dynamics: An early use of debt claims, followed by a switch to equity-like claims.

Capital Structure in the Modern World

Capital Structure in the Modern World
Author: Anton Miglo
Publisher: Springer
Total Pages: 266
Release: 2016-07-20
Genre: Business & Economics
ISBN: 3319307134
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This book focuses on microeconomic foundations of capital structure theory. It combines theoretical results with a large number of examples, exercises and applications. The book examines fundamental ideas in capital structure management, some of which are still not very well understood in the business community, such as Modigliani and Miller’s irrelevance result, trade-off theory, pecking-order theory, asset substitution, credit rationing and debt overhang. Chapters also cover capital structure issues that have become very important following the recent financial crisis. Miglo discusses the ways in which financial economists were forced to look critically at capital structure, as the problems faced by many companies stemmed from their financing policies following the crisis. The book also discusses links between capital structure and firm’s performance, corporate governance, firm’s strategy and flexibility, and covers such topics as life cycle approach to capital structure management, capital structure of small and start-up companies, corporate financing versus project financing and examples of optimal capital structure analyses for different companies. This comprehensive guide to capital structure theory will be of interest to all students, academics and practitioners seeking to understand this fast-developing and critical area of business management.