Why do good bankers at times respond unanimously with the same disastrous strategy? Rooted in regulatory economics and behavioural finance, the paper offers a taxonomy of effects that narrow banks decision scope into funnel-shaped and thus prepared the ground for the financial crisis. The basic...

Rousseau and Wachtel (2011) [Rousseau, P., Wachtel, P., 2011. What is happening to the impact of financial deepening on economic growth? Economic Inquiry 49, 276-288] find a weakening effect of bank finance on growth for more recent periods in replicating King and Levine (1993) [King, R. G.,...

Due to rising interrelationships between markets, domino-effects and contagion have spread the financial crisis into the European Union. While cross-border flows and international integration of financial institutions and markets grew considerably, supervision mainly remained on a national...

Why do good bankers sometimes respond with the same disastrous strategies? Rooted in regulatory economics and behavioral finance, the paper offers a taxonomy of effects that narrows the scope of the banks' decision making into a funnel-shape and thus, prepares the ground for a financial crisis....