If the financial institution is systemically important, the entire industry, the economy and the society as a whole bear the brunt of losses, in one way or the other. We have been witnessing for a decade how the banking industry across the world has been forced to reconstruct its balance sheet at the same time.
This includes, in particular, central bank independence, rules for monetary policy and for fiscal policies, appropriate supervisory frameworks and authorities. There is strong evidence linking well-functioning institutions and good governance to positive economic and social outcomes. Institutional factors appear to be as important as productive factor endowments or any other explanations in determining cross-country differences in the overall level of development.