entity · derived
Moral hazard
Derived node: assembled mechanically from the claims carrying moral-hazard. A roster, not an adjudicated definition.
Every claim under this term
- 1428387-021 : The principal-agent problem in complex financial products is exacerbated by hierarchies in financial institutions, which create multiple layers of agency relationships between the traders using the pr
- 1428387-022 : Moral hazard is worsened when the financial products traded are so complex that the agents, mostly on the buy side, do not entirely understand them and trade for the principal on the basis of incomple
- 1806252-011 : Banks' lending practices and counterparty credit risk management can curtail hedge funds' excessive risk taking because banks can use the threat of cutting off future lending to change a fund's behavi
- 1806252-012 : Banks are ideally positioned to deal with asymmetric information, moral hazard, and systemic issues pertaining to hedge funds, which is why hedge fund regulation should run through bank regulation.
- 1806252-013 : Because banks expect to be bailed out with taxpayer funds, they may have less incentive to monitor their hedge fund lending activities, even though hedge funds are not themselves counterparties in gov
- 1806252-035 : Registering hedge funds with regulators and requiring disclosure of pertinent information could help minimize the moral hazard, social externalities, and systemic risk generated by the hedge fund indu
- 1908473-014 : The incentive effects of corporate governance controls may not operate in systemically important financial institutions, because managers and owners who anticipate a bailout commitment adjust their ri
- 1908473-015 : Switching to contingent capital financing may reinforce rather than reduce risk incentives, and whether the risk incentives generated by contingent capital outweigh its risk reduction potential remain
- 1908473-016 : By internalizing the costs of bank failure, contingent capital can reduce moral hazard, and because a contingent debt security with a conversion trigger would presumably not default, it helps avoid co
- 1998455-001 : Government bailouts of systemically important financial institutions create strong incentives for those institutions to externalize the cost of their risk taking onto taxpayers.
- 1998455-002 : The implicit guarantees contained in a bailout multiply the incentives for systemically important financial institutions to increase leverage, because those guarantees make debt cheaper than equity.
- 1998455-008 : Contingent capital contributes to minimizing moral hazard by internalizing bank failure costs, that is, by placing those costs on the institution's own security holders rather than on the public.
- 1998455-035 : Treating the price of contingent capital securities as an indicator of how much people care about market integrity and moral hazard would require altruistic motives on the part of purchasers, and the
- 2061166-010 : Reliance on public bail-outs, unaccompanied by any threat that management, shareholders and creditors would share significant losses, created an asymmetric incentive for excessive risk taking by finan
- 2061166-021 : Contingent capital supports general risk control and reduces moral hazard by holding shareholders responsible and internalizing the costs of bank failure rather than externalizing them onto taxpayers.
- 2097160-020 : Ordinary SIFI creditors have suboptimal incentives to monitor management because they implicitly expect that the government will provide bailout funding given the nature of the entity.
- 2714974-028 : Direct regulation of hedge fund leverage increases moral hazard costs, because lenders and counterparties relax their own vigilance once they rely on government rules to constrain fund risk taking.
- 2714974-029 : Any prescriptive regulatory regime for hedge funds risks leaving the financial system less stable rather than more stable, because counterparties relax vigilance when they believe authorities are moni
- 2957645-007 : By internalizing the costs of bank failure, contingent capital may be able to minimize moral hazard, avoid financial contagion, and limit systemic risk.
- 2957645-021 : Appropriate use of contingent capital triggers can further lower the default risk of the contingent capital securities themselves, on top of the moral hazard reduction that comes from internalizing ba
- 3405660-002 : Moral hazard in hedge fund lending persists even when the lender is fully informed, because high enforcement costs can make prevention too costly for the lender.
- 3405660-026 : Banks can restrain borrower risk taking because they can credibly threaten to cut off future lending, a disciplinary tool other intermediaries lack.
- 3405660-034 : Market discipline, internal ratings and supervisory review under the Basel Framework change bank lending practice and disclosure, which in turn lowers hedge fund leverage and mitigates moral hazard of
- 3782210-024 : In hierarchical structures where members are siloed and have few formal connections across tiers, letting service providers create the regulations produces moral hazard, because the provider has an in
- 4685567-013 : Impact markets that promote retrospective funding and resale of impact carry an inherent risk of incentivizing net negative ventures, because individuals can capture the benefit of positive impacts wi
- 5886442-019 : Hidden action, that is moral hazard, and hidden information, that is adverse selection, are not merely reduced in the agentic economy but rendered computationally impossible at the substrate level, be
- 6421319-019 : Hidden action and hidden information are not merely reduced but rendered computationally impossible at the substrate level, because every inference, parameter update, decision trace, and model weight