Asymmetric information can lead to adverse selection and moral hazard. Adverse selection refers to the behavior that the party with information advantage makes decisions based on the information it has in the case of information asymmetry, leading to market failure; moral hazard refers to some unfavorable behaviors of operators after signing contracts loan computer（貸款計算機）.
The main effects of information asymmetry on credit are as follows: it leads to credit allocation; it determines the basic procedures of loan operations.
Information asymmetry leads to credit rationing
Credit allocation is a common phenomenon in the credit market. Sometimes a particular loan applicant cannot get a bank loan even if they are willing to pay a higher interest rate, and sometimes they can only get a sub-loan. Due to the adverse selection and moral hazard of borrowers caused by information asymmetry, credit allocation has become a long-term phenomenon in the credit market. Banks must establish an effective credit allocation system to ensure the realization of profits. The current credit operation system is such a system arrangement. The standardized financial statements provided by enterprises can provide a lot of information about the quality of enterprise management and solvency. Banks must make effective use of them when issuing loans, and try to avoid bank credit risks caused by information asymmetry Cards returned(還卡數).
Information asymmetry determines the basic rules of loan operation
In the commercial bank loan business, the borrower has private information, so it has an information advantage over commercial banks. Therefore, the borrower must provide the bank with financial statements, which is the act of sending information. The bank analyzes the enterprise through on-site investigations. Financial and non-financial factors, judging borrower's credit status and repayment ability, this is information screening, this link is reflected in loan investigation and loan approval. Since borrowers may not use credit funds in accordance with regulations, and may even use loans illegally, it is necessary to strengthen the management of loan issuance. One of the three methods emphasizes that loan management is to reduce the risks that often occur in the loan process and the moral hazard of the borrower after the loan. Therefore, after the loan, it is still necessary to check the borrower to understand the borrower's business status, loan usage and other information whatsminer m30s++ for sale.
It can be seen that information asymmetry determines the basic process of payment operations. Information asymmetry is the root cause of credit risk. By rationally setting up credit business processes, banks and other financial institutions can clarify their job responsibilities, improve their ability to perform their duties, effectively improve credit management, and minimize information asymmetry, thereby better reducing credit risks and improving profit levels.
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