What role does weak financial regulation and supervision play in causing financial crisis?

Weak financial regulation causes financial crises in the following ways:

1. If not properly regulated, financial institutions take on excessive risk which is a recipe for disaster if these ventures fail.
2. Unscrupulous players can take advantage of the lack of supervision to enrich themselves in underhanded ways. If too many engage in such behavior, it can cause the entire system to collapse resulting in a financial crisis.
3. Poor regulations and supervision can lead to unhealthy and monopolistic competition. If large monopolies collapse, they can affect the entire economy, leading to a financial crisis.