Islamic Banking and Finance

This assignment delves into the world of Islamic banking, analyzing its focus on establishing stable structures to promote economic growth. It examines key aspects such as business models, efficiency, risk management, and the influence of Islamic principles on financial practices. The paper utilizes scholarly research and real-world examples to provide a comprehensive understanding of this evolving sector.

Banking and Finance

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
RESEARCH.....................................................................................................................................1
ANALYSIS......................................................................................................................................1
RECOMMENDATIONS.................................................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Banking sector in Australian countries is greatly dominated by four major banking
sectors like New Zealand and Australia , Commonwealth, Westpac and National banks located at
Australian countries. The bank sectors are licensed under different acts like 1959, the foreign
banks were interested to open various branches in Australian market thus they were interoperated
in banking sector. There are different sectors which are dealing with money like credit unions,
mutual banking and building societies (Abdul-Rahman, 2014). They are providing limited
services in the banking areas. The sector of banking is highly competitive in modern world. This
report is based on the past, present and future aspects in regulation of Australian Markets.
TASK 1
RESEARCH
REGULATION OF AUSTRALIAN BANKS – PAST, PRESENT AND FUTURE”
History of Australian Banks: As there was settlement in Sydney which was called as
white between the time period of 1788 to 1817, at this time period, there were no banks and
operations of currency was also lesser. The first financial institution that has its operations were
New South Wales Banks. During mid-19th century, banks were successful in spreading their
operation around Australia. This bank has merged their business with other business dealing in
same operations in order to gain more profits. After that, Banks were successful in their ventures
of acquiring number of other banks which were called as National Banking Corporation in
Australia.
In the year 1835, there was formulation of new bank which was based in London called
as Bank of Australia. This would in future times referred as ANZ banking. There was a great
boom in Markets of Australia in the year 1880 which gave rise to crisis. This created an
environment where government authorities have little control on banking areas were failed in
their ventures of establishment of commercial banking and also National Banking areas in
Australia (Beck, Demirgüç-Kunt and Merrouche, 2013).
ANALYSIS
Current regulators and their roles in Australian Banking Sector
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The Reserve banks which are operating in Australia and they are handling overall
monetary transitions in order to ensure financial stability in economy. This bank had not showed
any interest in protection of the depositor’s interest and other creditors. They are mainly focusing
on dealing with threats that are cause of instability in economy. This results in losing interest
factors of all their customers and great spill in all activities which are taking place in economy.
In this situation RBA are acting as lender of last resorts in which they are giving all the liquidity
supports in situation of emergency. In this type of assistance the main focus of this banks is to
achieve funds in sufficient amount in order to run their operations at domestic areas. In various
situations RBA are ready to lend money to those institutions who are dealing with finance and
are facing difficulties in liquidity (Berger and Black, 2011). The financing institutions are to be
supervised under the control of APRA and they had to be solvent. If they are failed in repaying t
money than they will disturb financial stability factors which are operating in whole economy.
The decisions which are given by APRA about banking operations in difficult situations will be
supported by RBA.
(Source: Banking & Finance, 2017)
The Banks in Australia are running their operations under Boards of Payment Systems.
There are various compulsory factors like safety of money, effectiveness in payment procedures
and they should design strong back up systems in regulating all the powers at America.
Example: If RBA states that there is no chances to make improvement in providing safety
of the payment methods than the system can be designated as they are not able to provide safety
aspects and it was against the regulations. In order to save interest of public they can impose
safety aspects as it was stated in rules thus ensuring that standards are set in relation to safety of
money. Governance are having focus that all regulatory powers should be complied in a
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Illustration 1: Banking & Finance

approach, in relation to safety factors of those sectors which are running their operations
privately. The banks are having responsibility in order to develop accounts related with
settlement of all money exchange. This is valuable for depositors in order to show their presence
in exchange of money systems.
The current regulators are framed under FSR acts, RBA has responsibility to ensure that
all financial statements should be cleared in fairly manner. This is useful in achievement of
financial stability in overall systems (Law and Singh, 2014). They are also having power to
monitor all the activities which are linked with handing all the payment procedures. The role of
ASIC are different they are involved in matters like protection of investors, integration of
different markets, handling matters of cooperate governance and adhering all rules and
regulations that are related with standards of RBA. There was a memorandum signed by both
parties that is ASIC and RBA which was named as Memorandum mutual understanding. It was
enacted in year 2012 in order to define framework which are linked with settling all facilities and
clearing of licenses. This MOU is useful in achieving transparency in all their operations, it is
also beneficial in promotion of duplication of all efforts and decrease burden of all available
facilities. Under this task various aspects are covered like sharing of important message related
with monetary transaction, other important notifications related with settlement which are
designed to achieve all the aims and objectives (Rogoff, 2013).
Reserve Banks of America had addressed draft that are related with financial stability in
economy. This will be achieved by making all facilities available for public by the year 2002.
And their final statements related with settlement will be released by mid of year 2003.
The annual reports and various sites on internet which gives information about members
of the council are designed to help future information which are related with development ion
banking sector.
Recent governance and other concerns
The Reserve banks which are operating in Australia are independent bodies and they are
having main responsibility for managing overall monetary procedure in economy, the systems
adopted for making payments and other matters that are related with financial transaction. The
Banks are having their operations with two boards. The Reserve Board which are having the
overall responsibility for handling the monetary transaction, ensuring financial stability in
economy, the systems which are adopted by institution in order to pay money. This types of
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structures which are related with governance are set up by RBA in the act which were enacted in
1959. In relation to all the matters, the Banks are managing their overall operation with
assistance of governor (Berger and Black, 2011). The governance related with Public, Acts
which are linked with Accountability and Performances (PGPA) act of 2013, they are imposing
roles and responsibilities on the governance in relation to look into the matters that are linked
with managing the overall operations of Banking Systems.
The Boards of Reserve Banks are having remuneration and audit committee. The main
objectives which are related with Audit committee are giving reports to board members on
fulfilling different conditions which are related with statutory and financial matters, various
terms which are linked with PGPA and acts which are related with Reserve Banks. The defined
committee are assisting government to fulfil all their obligations and difficulties which are linked
with financial reports, controlling all the risk factors, fraudulent activities and the acts which are
related with regulatory compliances. The committee which are related with remunerations are
making recommendations with governance in order to remunerate deputy and head governor in
relation with Reserve Banks of America, the guidelines which are framed by Tribunal
Remunerations. There are also information generated in relation to arrangements for all the staff
members who are operating at Reserve Banks.
On making appointments with Reserve banks boards or the systems which are related
with payments. Each and every members operating at banks are required to make signature in
order to declare their presence in adopting all the rules and regulations that are declared by
boards so that they can achieve financial stability in economy (Reinhart and Rogoff, 2013). The
law states that all the staff members should follow all the duties which are mentioned in the
commonwealth banks as they were disclosed by the PGPA acts. Above these types of
requirements, the staff members have to apply all code of conducts in order to analyse all their
roles and responsibilities at RBA. They should also focus on holding back good reputations for
making integrations and priority is analysed on the part of Reserve Banks and the payment
structures.
Other concerns
The central banks are operating as independent body and they are directly accountable to
parliaments for taking any actions. They had to show their presence in the Reserve Banks act of
1959 to make consultation with Government of Australia. In context to public government and
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the performances act of 2013, the governor body is delivering annual report to Treasures so that
they can further translate them to Parliaments in Australia (Jones, 2012).
Reserve banks are focusing on increasing understanding of all the community members
in relation with adopting plans and policies with the help of communication course of study. The
most important aspect related with this concept includes media programmes, meeting of Reserve
Boards, statements in relation to monetary and fiscal policy, appointments of senior authorities in
front of Representative house, financial stability of Half Yearly and the standing committee on
economic aspects.
Releasing important information to media and Public
Reserve banks are involved in producing large number of publications which available on
the websites are evaluated as:
Media releases: The Reserve Banks are facing high issues from media which are
disclosing information on day to day activities. It contains information which are related with
enhancing financial markets so that they can easily execute their activities and to make
information on larger economic areas. The decisions which are related with cash rates are
targeted by RBA Boards and they are further explained in media after the boards meeting are
held.
Publications: The minutes which are related with policy of monetary meetings at Reserve
Bank Boards are published by Media after ending of each meeting.
Each year’s two annual reports are prepared by RBA which are called as Annual Reports
of Reserve Banks of Australia and the systems used for preparing annual reports on payment
systems.
Other publications are linked with preparing bulletins which are related with Reserve
Bank of Australia, statements which give financial stability and various statements which are
related with fiscal and monetary policy. All the bulletins which are issued on quarterly basis
contains articles about various financial and economic issues and development which are linked
with banking operations (Richards, 2012). The serial publication statements which are related
with monetary and fiscal policy are helpful in analysing the current economic conditions at
national and international levels. They have to consider the outlook of growth factors and
inflation rates in the economy because of which the prices of products have increased constantly.
The financial reports which are prepared on half yearly basis are evaluating current conditions of
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different financial processes and the risk factors involved in establishing financial stability in
economy. There are various topics covered like special interest groups in relation with different
occasional articles.
The other publications of banking sector includes:
A conference meeting is organised in which it contains all the essential documents that
are needed by officers and higher authorities. These are further presented at the economic
conferences which are held annually.
The research discourse papers which analyse the results of current economic conditions at
Reserve banks which are having their operations in Australia. These are available for making
comments and discussions. All the views of authors are greatly expressed in papers and they
need not be the members of Reserve Banks of Australia.
The final submissions are made by the bank members to different committees which are
related with injury in Parliaments.
Freedom of Information
The rights to have access on the important documents in the presence of Australian
governance frameworks in context to Freedom of information act that are designed in year 1982.
This applicable to all the Reserve Banks at Australia. The banks are called as exempt agency
below FOI acts in relation to all documents that are related with finance operations and the
matters which are related with control and exchange measures.
Recommendations in response to financial crisis
The financial crisis at global levels are analysing various difficulties in adopting plans
and procedures in order to achieve financial stability in economy. The critical factors includes
various aspects like insufficient capital structures, the liquidity risk are very high, inefficiency in
adopting effective work flows, unable to achieve economies of scales thus their operations are
not stabilised.
There are different ways in order to resolve the conflicts at national and international
levels which are described as:
The objectives which are linked with reforming agenda is used to analyse balance factor
between allocation of danger and the risk factors which are used in order to achieve growth
factor in economy.
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There are various types of reforming activities which consist of four major areas like
establishment of financial banking sector, analysing and addressing all types of risk which are
evaluating at RBA, analysing the risk factors in shadow banking, adopting safe areas at market
place, role which have been adopted by financial marketing structure (Wilson, 2012). The
working have to be addressed in effective ways so that risk factors can be removed which are
creating difficulty in establishment of stable and effective financial systems.
There was no deficiency factors noticed in Australian banking systems. The crisis had
analysed different ways by which plans and policies have to be adopted in order to make
modifications in Banking structures which are followed at Australia. Their banking operations
are operating all around the globe thus they have to adopt effective plans by which different
activities have to be executed. The Australian banking structure had made great and effective
performances in adopting reforms of international standards so that they can achieve
improvements in rendering their services in effective and planned. This results in achievement of
high profit.
RECOMMENDATIONS
As the plans and policies are changing constantly so there is wider attention given on
adopting international plans and procedures. This is beneficial in analysing all the risk factors in
systematic ways in order to make improvements in financial stability factors in relation to
monetary values in economy. The banking sectors are having arguments that present
arrangements in Australian markets for stabilizing financing policy and the different
coordination are working together in order to achieve good results. There is no case analysed in
relation to make changes in code of conducts for performing monetary activities at Reserve
Banks of Australia.
CONCLUSION
From the above report, it can be concluded that Reserve banks in Australia are
independent bodies who are performing banking operations at central level in the economy. They
are valuable in lending money to people who are in need. It has been assessed that these banks
are focusing on establishing stable structure in order to achieve higher growth in economy.
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REFERENCES
Book and Journals
Abdul-Rahman, Y., 2014. The Art of RF (Riba-Free) Islamic Banking and Finance: Tools and
Techniques for Community-Based Banking. John Wiley & Sons.
Beck, T., Demirgüç-Kunt, A. and Merrouche, O., 2013. Islamic vs. conventional banking:
Business model, efficiency and stability. Journal of Banking & Finance. 37(2). pp.433-
447.
Berger, A. N. and Black, L. K., 2011. Bank size, lending technologies, and small business
finance. Journal of Banking & Finance. 35(3). pp.724-735.
Fiordelisi, F., Marques-Ibanez, D. and Molyneux, P., 2011. Efficiency and risk in European
banking. Journal of Banking & Finance. 35(5). pp.1315-1326.
Hensman, A. and Sadler-Smith, E., 2011. Intuitive decision making in banking and finance.
European Management Journal. 29(1). pp.51-66.
Ibrahim, M. H., 2015. Issues in Islamic banking and finance: Islamic banks, Shari’ah-compliant
investment and sukuk. Pacific-Basin Finance Journal. 34. pp.185-191.
Jones, G. ed., 2012. Banks as Multinationals (RLE Banking & Finance). Routledge.
Law, S. H. and Singh, N., 2014. Does too much finance harm economic growth?. Journal of
Banking & Finance. 41. pp.36-44.
McAndrews, J., Sarkar, A. and Wang, Z., 2017. The effect of the term auction facility on the
London interbank offered rate. Journal of Banking & Finance. 83. pp.135-152.
Reinhart, C. M. and Rogoff, K. S., 2013. Banking crisis: an equal opportunity menace. Journal
of Banking & Finance. 37(11). pp.4557-4573.
Richards, R. D., 2012. The Early History of Banking in England (RLE Banking & Finance).
Routledge.
Wilson, R. ed., 2012. Islamic Financial Markets (RLE Banking & Finance). Routledge.
Online
What is banking?. 2017. [Online]. Available through:
<http://www.investorwords.com/5413/banking.html>. [Accessed on 9th September 2017]
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