The sector having the most important role among developedness indicators is financial sector. The most important and vulnerable part of this sector is banking system. Financial liberalization and relaxation in political approach, based on strict norms, following it, and increasing competition at sectorial level required the presence of supervision mechanisms. The rigid rules of supervision system under consideration led profit margin to fall gradually. Hence, alternative searches became a current issue in terms of the other actors of banks and banking system. These alternative ways, developed and termed off-balance sheet activities despite the fall at profitability level, are shown as one of the main reasons for 2008 Global Crisis by some economists and draw attention to the concept of shadow banking. In USA, together with the synthesis of liberalization and financial engineering, “Shadow Banking” system formed as the main reason for 2008 Crisis and played role in its development. In this study, the effects of shadow banking on world banking are dealt with the theoretical meaning, and a set of economic policy are suggested in the light of the data obtained.
Determinants of Banking System Fragility: A Regional Perspective