His findings, in a paper titled The Financial Crisis of 2015: An Avoidable History, sound a cautionary tale.
The 24-page study outlines how banks, unwilling to accept the lower returns on equity that result from requirements to carry higher levels of capital, could inadvertently be fuelling a new asset bubble by chasing high returns in commodities or emerging markets – mostly through Asia.
Regulators, by focusing on curbing the risky behaviour of banks, may be driving risk-taking into unregulated funds that pose a danger to the system, the study finds.
The shadow banking system has been singled out as providing the conditions that inflated the US housing bubble. This quickly evolved into a global crisis.