It is clear that there were multiple failures and multiple individual and collective decisions leading up to the financial crisis. For example, collective groupthink, business model and strategy failures, governance and control issues, financial misconduct, excessive optimism, regulatory failures, political interference and so on. There are behavioural and cultural linkages across all of these failures.
When interest rates decline due to monetary easing, lending margins of financial institutions narrow, given the limit to reducing loan interest rates, and their capital adequacy ratios remain under downward pressure as they are unable to secure profits commensurate with their risk-taking. In contrast, the second pattern involves a rapid emergence of side effects.