Unit16RiskManagement.docVIP

Unit16 Risk Management Principles of Credit Risk Management 1 Adverse selection in loan markets occurs because bad credit risks those most likely to default on their loans are the ones who usually line up for loans; in other words, those who are most likely to produce an adverse outcome are the most likely to be selected. Borrowers with very risky investment projects have much to gain if their projects are successful; and so they are the most eager to obtain loans. Clearly, however, they are the least desirable borrowers because of the greater possibility that they will be unable to pay back their loans. Adverse selection in loan markets occurs because bad credit risks those most likely to default on their loans are the ones who usually line up for loans;在信贷市场上所以发生逆向选择问题，是因为高信贷风险者 那些最有可能在贷款上违约的人们 常常就是那些排着队申请贷款的人。 in other words, those who are most likely to produce an adverse outcome are the most likely to be selected.换言之，那些最有可能造成“逆向”结果的人，常常就是那些被选中得到贷款的人。 Borrowers with very risky investment projects have much to gain if their projects are successful; and so they are the most eager to obtain loans.如果项目成功，那些有着巨大风险投资项目的借款人将大有好处，因而这些人最急于得到贷款。 Clearly, however, they are the least desirable borrowers because of the greater possibility that they will be unable to pay back their loans.然而，由于他们极有可能难以偿还贷款，他们显然是最不合意的借款人。 Moral hazard exists in loan markets because borrowers may have incentives to engage in activities that are undesirable from the lenders point of view. In such situations, it is more likely that the lender will be subjected to the hazard of default. Once borrowers have obtained a loan, they are more likely to invest in high-risk investment projects---projects that pay high returns to the borrowers if successful. The high risk, however, makes it less likely that they will be able to pay the loan back. Moral hazard exists in loan markets because borrowers may have incentives to engage in activities that are undesirable from the lenders point of view.贷款市场上所以存在