Capital inflows plus risk appetite equals crisis, conference hears

Competition with bond markets raises danger of crash


Crises are the result of foreign capital flowing into a risk-hungry and competitive financial sector, an audience at the London School of Economics (LSE) heard yesterday. Speaking at a conference held by the LSE's Systemic Risk Group, academics Mark Copelovitch (University of Wisconsin) and David Singer (MIT) described a provisional finding that current account deficits – representing an influx of capital to a country – were, as generally thought, linked to the build-up of an asse