Defining how credit markets can be inefficient

Reference no: EM132174587

Question: Take the example of a poor individual who does not have any collateral, and therefore cannot obtain a loan from a standard commercial bank. What is the link between financial exclusion and moral hazard in this particular scenario? Draw a graph showing how credit markets can be inefficient when a potential borrower lacks assets that can be used as collateral to gain access to loans from standard commercial banks.

Reference no: EM132174587

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