What has caused this trend of accelerated borrowing? The main reasons were the liberalisation of credit markets since the late 1970s and the introduction of (complex) financial innovations which made it easier to borrow. In several countries the accumulation of debt was financed by property investment, which could be used as collateral for even more borrowing.
Moreover, since the mid-1980s until the current crisis, the economic environment has been more stable, a period that has been coined the Great Moderation. Lower unemployment and inflation rates and less uncertainty made investors more optimistic. Borrowers borrowed more and lenders lent more – while inflation remained low. In addition financial innovation stabilized the credit supply.