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Business, 12.11.2019 04:31 brandy127

To reduce moral hazard problems, banks include restrictive covenants in loan contracts. in order for these restrictive covenants to be effective, banks must also be: a) prepared to extend the deadline when the borrower needs more time to comply. b) trust the borrower to do the right thing. c) monitor and enforce them. d) be willing to rewrite the contract if the borrower cannot comply with the restrictions.

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To reduce moral hazard problems, banks include restrictive covenants in loan contracts. in order for...
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