The globalization process has started long ago but its effects are still unknown to many industries. In recent years the world has observed a variety of financial crisises that have occurred alomost at every corner of the world. the cross-border flows of money have a negative influence when things go wrong, and lead to the crisis that threatens the global financial system itself.

The world has experienced many significant changes over the past two decades, particularly in developing countries. These changes have led to globalization, which began when the global trend of financial opening in 1990 restored the degree of international capital mobility not seen since the beginning of this century. In industrialized countries, elimination of restrictions on capital flows accelerated in the 1980s and 1990s, starting with Margaret Thatcher to reform in the united kingdom with Japan continues the liberalization of capital in the early 1980s and ending with the elimination of intra-EU European community of barriers to capital flows in the 1990s (online).

Globalization means the world, capitalism, and capitalism is the market for most of the corporation. The development of new technologies & telecommunications allows the expand of global market to a new dimentions, people, goods and services cross borders with ever-increasing rate. Economic globalization, aided by the growth of new technologies has provided new opportunities for economic growth. This has created a lot of economic and social benefits of some countries but not others, and disproportionately on certain groups within these countries. It also reduced the regulatory authority from national and sub-national (public sector) and increasing the power and influence of transnational corporations (private sector). The planet is shrinking, perhaps as much as business interests are concerned, but the gap between rich and poor within and among most nations going in the opposite direction. This has profound implications for people in both the developed and developing countries.

Moreover, globalization will facilitate the diversification of risk by the banks and improve the overall performance of different countries by improving the allocation of resources. On the negative side, if consolidation has gone too far, it could lead to abuses of dominant market position and moral hazard, particularly when institutions are considered too big to fail. In addition, the excessive length of participation in foreign markets without sufficient knowledge of local economic conditions could increase the vulnerability of individual banks.