Banks issued subprime mortgages prior to 2007 due to perverse incentives and moral hazard
the verdict
SUPPORTED
the evidence backs this
confidence 82/100
Evidence from financial crisis literature strongly supports the conclusion that structural flaws, perverse incentives, and moral hazard drove banks to issue subprime mortgages prior to 2007.
Evidence for · 2
The Financial Services Industry and Society: The Role of Incentives/Punishments, Moral Hazard, and Conflicts of Interests in the 2008 Financial Crisis
2017 · cited by 15
Paper [0] identifies inappropriate incentives, moral hazard, and conflicts of interest as structural flaws in the securitization chain leading up to the 2008 financial crisis.
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More for · 1
Perilous and unaccountable: The positive relationship between dominance and moral hazard behaviors.
2024 · cited by 4
Paper [2] notes that decision-makers engaged in moral hazard behaviors by prioritizing self-interest while shifting associated risks, directly citing the 2008 financial crisis and subprime mortgage investments.