Question

One financial intermediary in our financial structure that helps to reduce the moral hazard from arising from the principal-agent problem is the.

Answer 1

The venture capital firm is one financial intermediary in our financial system that aids in lowering the moral hazard that results from the principal-agent issue.

A form of private equity and financing offered by investors to start-up companies and small businesses with the potential for long-term growth is known as venture capital (VC). The majority of venture capital is often provided by wealthy individuals, investment banks, and other financial organizations.

However, it doesn't always take the shape of cash; it might also be in the form of technical or management expertise. Startups with exceptional growth potential or companies that have experienced rapid growth and appear to be in a strong position to continue growing frequently receive venture capital.

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