Occasional waves of higher risk tolerance in financial markets can expand the supply of external finance for the productive sector and for government. And this can make previously unprofitable investment programs look attractive, which can boost growth. But, unlike more structural shifts in financial market infrastructures, occasional turns in risk tolerance are just that: occasional.
Reversion to some sort of steady values for risk appetite can undo established market trends and give rise to a prolonged period of strains in market valuations. 10  The emergence and growth of new financial intermediaries can have further and deeper causes.