Steve Clarke is hoping to keep Glenn Murray at Reading after his loan deal expired following the 2-1 win over Norwich.
QPR boss Harry Redknapp admitted he needs to strengthen his squad after his side's 0-0 draw with Crystal Palace.
The 25-year-old is due to become a free agent this summer after failing to secure fresh terms at Derby and that has opened the door to a possible return to Crewe, the club that helped to launch his career.
Bailey is a product of the Alex’s famed academy system and spent three years in their first-team set-up before stepping up the ladder to join Derby in 2010.
After making a bright start to life with the Sky Bet Championship side, the versatile midfielder began to slip down the pecking order and spent time on loan at Coventry City in 2012/13.
He is now looking to make a fresh start and reignite his career, and Davis would be happy to offer him the opportunity to do that in familiar surroundings if there is a deal to be done.
He said: “I am aware that we have been linked with James Bailey and I have never been against bringing former players back to the club.
“It would be like any other player. If they are better than what we have, then we would do it and he has arguably been better than what we have had.
“I wouldn’t say he was on our radar as such, but I wouldn’t bet against it.
“Sometimes, a player needs to take a step back to get his career going again and there is no better place than where it all started for him here.
“Much would depend on him and his hunger to get himself going again but we know he is a good player and could do a job for us.
“He didn’t play too much at Derby last season, but he did well on loan at Coventry at this level.”