The role of financial system in ensuring financial stability

Particularly by the end of the 20th century, an unprecedented acceleration can be observed on the developments that took place within the financial system. Various factors such as improvement of information technologies, liberation of capital flow, decisions directly taken by financial authorities on the financial system and globalization, have all had a role in this acceleration. It was realized that as the global financial system started developing and expanding, several risks began threatening the sustainable financial stability. The costs of this realization were very high. Firstly, financial crises, which are regarded as the source of financial instability of the economies of countries in development, spread throughout the whole wide world as a result of interconnected financial systems. With the global financial crisis, which happened in 2008 following these crises, it became clear that even developed economies were under threat. This study was prepared in order to explain the effects of the financial system as a whole on financial stability. For this purpose, a wide literature search was conducted to create a set of indicators related to the features of the financial system, by compiling the financial stability indicators of national and international institutions. This set of indicators was first compared to the data corresponding to the before and after of the financial crises of Mexico, Russia, Brazil, Turkey and Argentina, between the years of 1992 and 2016 and the role of the financial system on financial stability was put forward. Moreover, an evaluation of the future financial stability of Italy's economy was also made by including Italy, which is also nowadays experiencing financial systemrelated problems, among the chosen countries.