"Investment in financial expertise is destabilizing, in that it creates a risk of destruction of the gains to trade when there is an exogenous shock to the level of uncertainty in the economy," the research states.

"When someone is really good at valuing a security and he tells you 'I need to sell this asset because I need more liquidity,' it is more difficult to trust his motives because he might be trying to sell you an asset using information you don't have," Glode tells , the business school's online publication.

Comparing the financial arms race to the more literal arms race, Glode says that while "the best thing is to have no countries investing in nuclear weapons to make sure you will never have a war," it's always optimal, from one country's point-of-view, "to get some weapons in case the other country acquires weapons, too."