Draw a graph showing how credit markets can be ineffi cient

Reference no: EM131915989

Problem

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 fi nancial exclusion and moral hazard in this particular scenario? Draw a graph showing how credit markets can be ineffi cient when a potential borrower lacks assets that can be used as collateral to gain access to loans from standard commercial banks.

Reference no: EM131915989

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