The first session of the Irish Banking Inquiry has been told that bank staff, government and borrowers share blame for the crisis that sank the economy.
An Irish parliamentary committee has begun examining the reasons why the Republic of Ireland "experienced a systemic banking crisis" in 2008.
Finnish banking expert Peter Nyberg was the first person to give evidence.
He said the government and institutions misjudged the risk and mistakes were made for years leading up to the crash.
"Judging by the consequences, which were larger in Ireland than anywhere else, the Irish institutions were pretty good at misjudging risk internationally," Mr Nyberg said.
However, Mr Nyberg added that it was unfair to say that "everyone partied" in the years before boom turned to bust.
The Republic of Ireland suffered one of the eurozone's deepest recessions following the global financial downturn in 2008.
The Irish property boom, fuelled by years of massive bank lending, turned to bust, leaving several major banks in serious financial difficulty.
In September 2008, the Irish government introduced a guarantee to cover the debts of the country's banks, in a bid to prevent a "run" on the institutions.
However, the bill was much higher than expected and the guarantee ultimately sank the Irish economy, leading the government to seek an 85bn euro rescue package from the European Union and the International Monetary Fund (IMF) in 2010.
Mr Nyberg said the Irish government had taken what appeared to be the safe option when it decided to underwrite the bank's deposits.
"When decision-makers are faced with that situation, what one tends to do is take the safe decision, even though afterwards it might not seem so wise, and that is what I think the government did."
He said he understood but did not necessarily condone the move.
"It is a culmination of a lot of mistakes that were made before but the mistakes were not made on that night, the mistakes were made several years before and not only by the government but really by everyone else."
Mr Nyberg, who is a former IMF economist, completed a report in 2011 that examined the causes of the Irish banking crisis.
He told the inquiry that the mania that surrounded the Irish property boom was unlikely to have ever resulted in a soft landing, even without the international financial problems that led to the global downturn.
When parliamentarians asked if the Irish banking crisis was essentially "homegrown", Mr Nyberg said it was.
He said nobody forced the banks to grow or Irish households to invest and borrow in the way they did, it had been voluntary.
The chairman of the inquiry, Ciarán Lynch, said a "dark cloud" lingered over every home in the Republic of Ireland as a result of the 2008 Irish banking crisis,
Mr Lynch said the inquiry had to ensure it did not happen again.
The terms of Ireland's international bailout led to widespread public spending cuts and tax increases against a backdrop of high unemployment.
The Republic of Ireland officially exited the bailout programme 12 months ago, but the state still faces years of unpopular austerity measures in order to meet its international commitments.