How to prevent furtue financial crisis

THE roots of the global financial crisis can be traced to the US subprime debacle which occurred in 2007-08.

First, bad loans were incurred by banks, resulting in excessive credit expansion. In general, these loans were financed by huge leverage based on short-term borrowings. Second, poor corporate governance and lack of transparency among major financial conglomerates intensified the financial meltdown. Risk management at major US banks broke down, while compensation structures of financial executives were merely based on short-term performance.