Looking at some specific data, Financial Statements Statistics of Corporations by Industry, Quarterly points to firms’ profitability in terms of return on assets (ROA) at somewhere around 4 percent while average interest payments amount to only about 1 percent (Chart 10). Firms’ ROA exceeds their funding cost by a larger margin than ever before.
In a similar manner, a Norwegian economist looked at banking and financial crises in Norway going all the way back to the early 1800s. She found that every major crisis was preceded by a rapid run-up in real housing prices. Consequently, it is apparent that unsustainable trends in housing prices and home financing have been a major contributor to financial crises.