Recovery from the “Great Recession” has been much slower than was expected and there have been repeated disappointments. This has to do with debt. Economic history shows that economic recoveries are especially slow after slumps which have involved financial crises.
BIS central bankers’ speeches  1  Joseph Stiglitz and his co-authors, for instance, find that financial crises have become more frequent since deposit insurance systems were introduced and central banks were established as the lenders of last resort.2 From this, we can conclude that moral hazard plays an important role in the way banks deal with risk.