moral hazard 
moral hazard
Definition
moral hazard
noun
risk (to an insurance company) arising from the possible dishonesty or imprudence of the insured
moral hazard Finance Definition
A
dilemma that arises when government officials take steps to bail out countries
or businesses that are in serious financial trouble. Although the action may
help prevent widespread financial turmoil, thereby protecting innocent parties,
it creates an expectation that governments will always come to the aid of
failing countries and companies, potentially increasing risky behavior because
there is no penalty.
moral hazard
Usage Examples
Converse of object
- create: Any decision to support an institution, particularly in circumstances of underlying insolvency, creates a moral hazard that undermines market discipline.
- avoid: Keen to avoid moral hazard, many authorities have traditionally declined to discuss their policy stance on the grounds of " constructive ambiguity " .
Browse dictionary entries near moral hazard
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