Shares of National Australia Bank Ltd. (ASX: NAB), Westpac Banking Group (ASX: WBC) and Australia and New Zealand Banking Group (ASX: ANZ) have fallen hard over the past year.

Source: Google Finance

Source: Google Finance

Together with Commonwealth Bank of Australia (ASX: CBA), these time-tested stalwarts of the Australian share market have consistently produced enviable returns for shareholders. Therefore, some investors are likely asking themselves if now is the right time to build a position in big bank shares.

Headwinds ahoy

The slowing economy is the most likely reason bank shares have fallen sharply over the past 12 months. Indeed, a winding-down of the mining boom has led some investors to believe the ripple effects will filter through to the broader economy.

And when the potential for slowing credit markets combines with historically low bad debt charges, unsustainable growth in property markets and regulatory change, it is never going to end well for bank shareholders.

Unfortunately, with the mining sector still slowing down, competition in credit markets growing, and APRA likely to toughen bank capital rules, it’s possible the major banks will conduct more capital raisings in 2016 or beyond.

Foolish takeaway

Over the past 20 years, Australia’s major banks have proven their doubters wrong. Over the period, however, we haven’t experienced a recession and the mining boom has provided a very reliable flow of funds into our capital markets. That capital is now leaving at a time when, in my opinion, the banks are more vulnerable.

So if you’re overexposed to Australia’s banking sector, I’d say now may be a good time to look elsewhere for market-beating investment returns.

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Motley Fool writer/analyst Owen Raszkiewicz does not have a financial interest in any company mentioned. Owen welcomes -- and encourages -- your feedback on Google+, LinkedIn or you can follow him on Twitter @ASXinvest.

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.