Opacity fosters price contagion that exacerbates the speculative cycles of bubbles and crashes that create financial instability. We find that banks with larger investments in opaque assets benefitted more from intra-industry revaluations associated with announcements of mergers in the period...

We hypothesize that growing wealth inequality has exacerbated leveraged asset bubbles in the wealthiest nations over the last several decades through a “keeping up with the Joneses” effect. Rising inequality strengthens the desire of households to improve their social status by owning assets...