However, even in the 1990s, we repeatedly observed financial crises that went far beyond the collapse of individual financial institutions and affected entire financial systems, such as the asset bubbles in Japan and the Nordic countries, the currency crises in Asian countries and Russia, and the failure of the Long Term Capital Management.
The increased frequency of crises along with changes in financial systems seem to suggest that while financial system efficiency has been considerably enhanced, vulnerability has also increased. Why should this be?