The costs of writing off and provisioning for loan losses, otherwise known as “credit costs,” have declined overall, and this meant that most banks managed to close their books in the black. During this period unwinding of cross-shareholdings, which had been deemed excessive, progressed with a concomitant reduction in exposure to market risk.
Two representative grounds for this argument are the non-linearity of the Phillips Curve, implying that under conditions of economic slack the influence of economic conditions on prices could temporarily decline, and the time lag between economic activities and their effects on prices.