Management of Banking and Financial Services, 4th Edition by Pearson

managing banking and financial services—current issues and future challenges n 7

The Causes of the Crisis

Several arguments/theories/events have been cited as the causes of the 2007 crisis. But, there seems to be consen-

sus on one possible over arching cause—lack of adequate attention from monetary authorities and regulators to

certain factors that were shaping the global nancial system when the crisis happened. Three groups of mutually

reinforcing factors were then contributing to increased ‘systemic’ risk. They were as follows:

n Lower interest rates caused by worldwide macroeconomic imbalances over the last decade, inducing height-

ened ...