Question.1120 - Read the article All About Moral Hazard: 3 Examples of Moral HazardLinks to an external site. and identify an example of a behavior that impacts increased healthcare spending through this concept. Share your research findings, observations and discuss the behavior chosen, and how its practices might be emulated within the healthcare industry. Be sure to post an initial, substantive response by Thursday at 11:59 p.m. MT, and respond to two or more classmates or the instructor with substantive responses by Sunday at 11:59 p.m. MT. A substantive initial post answers the question presented completely and/or asks a thoughtful question pertaining to the topic. Be sure your post is unique. Do not repeat what other students have said. Substantive peer responses ask a thoughtful question pertaining to the topic and/or answers a question (in detail) posted by another student or the instructor.
Answer Below:
In an ecosystem that vitalizes one with the reciprocity of the rest, moral hazards can intervene and adversely scrutinize the cause and effect of business. The global financial crisis of 2007-2008 raised moral hazards in the banking sector and affected the global economy very badly. Lower interest rates attracted the borrowers to get cheap loans from the bank, which has then been sold to the investors. But when the interest rates got raised as per the initiation of the Federal Reserve, the housing market happened to face adversity (Verberi, 2023). Defaulting on their subprime mortgages, the homeowners let the undervalued property mortgages endanger investors and banks to bankruptcy. The government’s extension of support towards the reversion of financial chaos terribly failed by leaving a loss of trillions of dollars tolling the global economy. The unrealistic expectations andpossession of market bias of several financial institutions led to the financial crisis of 2008. The global economic crisis was incurred by the simultaneous pursuits of financial decision-making behavior of two large institutions based on the assumption that the outcome had no downside side for them. Lack of awareness and sufficient consumerism towards acquiring loans and borrowings led the lenders to initiate inappropriate business decisions regardless of the repercussions of not abiding by principles, mandates, rules, and approaches. The lenders of finance invariably provided loans to individuals seconding on the government as a backup on the possible occasions of recovery from the loss incurred. References Dowd, K. (2009). Moral hazard and the financial crisis. Cato J., 29, 141. Verberi, C., Yasar, S., & Sugozu, I. H. (2023). Capital liberalization, growth and moral hazard: Lessons from the global financial crisis. International Review of Financial Analysis, 90, 102901.More Articles From Medicine
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