Moral Hazard and Financial Instability (Financial Economics)
- A-Level, IB
- AQA, Edexcel, OCR, IB, Eduqas
Last updated 4 Apr 2018
This revision video explores the relationship between moral hazard and financial instability.
Moral hazard happens when an agent is given an implicit guarantee of support in the event of making a loss – for example insurance pay-outs or the prospect of a state bail-out.