The inverse dependency ratio, which represents workers per non-working population, appears to have a positive correlation with real estate market development (Chart 17). This implies that attention should be paid to demographics as a factor contributing to the formation of financial bubbles. Third, pay attention to changes in financial institutions’ behavior following financial liberalization.
Although active lending by financial institutions has been the direct cause of the formation of bubbles in advanced economies, these institutions’ lending attitudes became aggressive as a result of fierce competition and an associated decline in profitability triggered by financial liberalization. While financial liberalization itself is necessary, it should be pursued under a combination of appropriate regulations and supervision.