In the short term though, ECB research has shown that the effect on the profitability of financial institutions has been overall positive, as they benefited from capital gains associated with asset price increases and, in the case of banks, from lower funding and impairment costs.8 These effects, however, decline with time and are likely to fade out at some point.
The emergence of systemic risks and the eventual eruption of the crisis were also the consequence of the fact that corporate governance, risk management, market infrastructures for derivative products as well as supervisory practices and regulatory frameworks did not keep up with the rapid transformation of the financial systems. What has been the impact of the crisis on financial integration and development?