Financial institutions have less of a cushion of protected profits and are therefore more vulnerable to losses caused by mismanagement or misfortune. This has inevitably increased the emphasis given to the role of the authorities as the ultimate guarantor of financial stability. At the same time, it has reduced the effectiveness of regulation that is not based on market incentives.
Financial institutions have a broad menu of techniques that enable them to get around regulations that are intended to increase safety, but are burdensome to the institutions to which they apply. BIS Review 81/1997  -3-  II.