The financial service sector has been gaining increasing importance in today’s rapidly globalising economy. This importance has been recognized in theoretical literature in terms of its contribution towards long-term growth and efficiency given its intermediate role in channeling resources to all sectors of the economy. This sector has seen massive internationalization due to widespread liberalization around the world which includes domestic financial deregulation, capital account liberalization and opening up to foreign competition. This globalization of financial services has however led countries to be more concerned about the potential risks of opening of this sector and is forcing them to be more cautious by strengthening their prudential regulatory and supervisory standards and capability in line with international best practices and standards.
