That a collection of rational financial institutions does not necessarily make a rational financial sector. In other words, rational behaviour at the individual institutional level does not aggregate to collective rationality because of the fallacy of composition. Financial institutions are notoriously prone to herd behaviour.
*  *  *  Since 2003 Israel’s economy has been enjoying economic growth, and since 2004 GDP has been rising by more than 5 percent per year. At the same time price stability has been maintained, and the economy has shown impressive financial and economic stability.