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How do you reduce adverse selection and moral hazard in commercial bank?
Wiki User
∙ 10y ago
There are a number of ways of reducing moral hazard and adverse selection in the insurance industry which are
- compelling parties to disclose material information to each other
- Investing in better risk screening methods
- offering a menu of policies for the different risk types
- devote more effort to monitoring
- use of deductibles, retrospective rating, experience rating
- requesting insured to prove insurable interest in subject matter of insurance
Wiki User
∙ 10y ago
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Does computer reduce cost?
You blew a thousand dollars on a computer. Of course you reduce no costs.
What is the most important three Rs?
to reduce the amount of trash in the environment
What did the treaty of Versallies made Germany reduce in WW1?
Germany had to reduce the of their military and not manufacture military equipment.
What did the United states and Soviet Union agree to do in START?
Reduce Nuclear Weapons, people! I HAVE FURY!
Which technique are you most likely to use to reduce tension when communicating difficult information?
Which technique are you most likely to use to reduce tension when communicating difficult information?
What type of fitness test was developed to reduce adverse impact in the selection process?
physical agility
Does the probationary period reduce adverse selection?
Yes, if someone has a claim RIGHT NOW, they will probably look for another company that will accomodate them.
How can the adverse selection problem explain why you are more likely to make a loan to a family member than a stranger?
In my understanding,I think we can reduce risk when we make loan to a family members as well as lowering a transaction cost to him/her.
Will wearing goggles or other eye protection remove the hazard for these students?
No. It will reduce the hazard, not remove it.
What is anti-selection?
The adverse impact on an insurer when risks selected have a higher chance of loss than that contemplated by the applicable insurance rate. Also known as adverse selection. The selection of such risks is adverse because the rate is inadequate.In other word, tendency of people with significant potential to file claims wanting to obtain insurance coverage. For example, those with severe health problems want to buy health insurance, and people going to a dangerous place such as a war zone want to buy more life insurance. Companies employing workers in dangerous occupations want to buy more worker's compensation coverage. In order to combat the problem of adverse selection, insurance companies try to reduce their exposure to large claims by either raising premiums or limiting the availability of coverage to such applicants.
What are the control measures that can be used to eliminate or reduce the hazard?
Some control measures that can be used to eliminate or reduce hazard include: lock off and permit to work procedures, provision of safe access and egress, use of guards and fumes extraction equipment, use of personal equipment.
You must reduce your speed when approaching?
Any potential hazard
A driver must reduce speed and adjust to changing conditions in?
adverse weather
What is The strategy which is not aimed at reducing selection bias is?
the strategy that will not help reduce selection bias is:
What are actions taken or measures put in place to eliminate a hazard or reduce the associated identified risk.?
Are actions taken or measures put in place to eliminate a hazard or reduce the associated identified risk.?
Are actions taken or measures put in place to eliminate a hazard or reduce the associated identified risk?
Are actions taken or measures put in place to eliminate a hazard or reduce the associated identified risk.?
What bank regulation is designed to reduce adverse selection problems for deposit insurance?
Almost all of the recent legislation in Banking was in some part made to reduce adverse selection. Federal Deposit Insurance Corporation Improvement Act of 1991 gave FDIC rights of corrective actions towards problem banks, and required riskier banks to pay higher insurance premiums. Also Dodd-Frank Bill 2010 had lots of regulaiton, like monitoring actions. The list of the most important legislation can be found here: http://www.fdic.gov/regulations/laws/important/index.html
