Risk cycles and the business cycle - Form low risk comes growth but also greater credit risk

There is a business cycle, a credit cycle, and a risk cycle. These are all connected. In the paper, "The impact of risk cycles on business cycles; a historical view" the identification of the risk cycle is used to generate statement on growth, risk-taking, and the potential for crises. 

The authors show that a perceived low risk environment will encourage risk-taking which will support stronger growth, but with this growth comes greater financial vulnerabilities, that is, there will be a reach for more risk and for higher leverage. The duration of low-risk impacts growth.

Increasing financial vulnerability will lead to a reversal of growth when these risks are realized. From a low-risk cycle comes a growth upturn which creates excess credit growth. If this happens on a. global the impact on growth will be stronger because there will be grater movement in global capital flows. 

This is another way of saying that Minsky behavior can be measured through a risk cycle.