Increasing FDI inflows into a booming sector resulting in an appreciation of the real exchange rate may entail further capital inflows and greater appreciation pressure on the real exchange rate up to an abrupt reversal of the capital (Botta, 2015). The macroeconomic instability of such...

The aim of this paper is to investigate the impact of the unusually low interest rate environment on the soundness of the US banking sector in terms of profitability and risk-taking. Using both dynamic and static modeling approaches and various estimation techniques, we find that the low...