The 2007-2008 financial crisis: Is there evidence of disaster myopia?

► The disaster myopia is a theoretical argument that explains the recurrence of crises. ► This paper tests the evidence of disaster myopia during the 2007 financial crisis. ► Its contribution is twofold. ► It shows that the recent crisis exhibits disaster myopia in the banking sector. ► It identifies macro and specific determinant variables in banks' risk taking.