By risk capital markets I mean private equity and venture capital markets that fund young innovative companies whose projects face higher uncertainty, but also have higher economic value in terms of technological growth. Deep private equity markets are associated with well-documented economic benefits.
As observed by Raghuram Rajan 2, growing income inequality in the United States, stemming from unequal access to quality education, led to political pressure for more housing credit which led to distorted lending in the financial sector.