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Moral hazard and adverse selection pose difficulties for banks allocating credit Gupta and Hansman's recent...

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Moral hazard and adverse selection pose difficulties for banks allocating credit Gupta and Hansman's recent paper tries to tease out which of the two is a more powerful force in the US mortgage market What do they find? Default is poorly explained by their model O The effects of AS and MH are both important in explaining mortgage default Moral hazard is the primary cause of mortgage default in the USA Adverse selection is the primary cause of mortgage default in the USA

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