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Highly concentrated and correlated risks combined with high leverage made the financial sector fragile and prone to crisis. Firms took on too much risk and did not have adequate capital buffers to withstand losses. Some firms hid their true leverage through off-balance sheet entities. Regulators also failed to rein in excessive risk-taking, with investment banks subject to only light regulation that prevented monitoring of capital and liquidity levels. This regulatory failure contributed to the failure of s

Author
Amit Panchal
Language
EN