So was poor risk management, which at some firms allowed the build-up of massive risk concentrations across the firm that further compounded already shaky asset quality. Some banks were caught completely unaware by concentrations to subprime loans that they had in their loan portfolios.
A rough indicator of developments in labour productivity in the financial sector can be obtained by looking at domestic lending – or alternatively financial assets – relative to employment in the sector. Calculated in this way, labour productivity was more or less constant in the decades before the liberalisation of the financial markets, which really took off in the early 1980s.