Impact of Royal Commission on Banking Sector and Australian Economy

Running head: ECONOMICS
Economics
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ECONOMICS1
Executive Summary
Objective of the paper is to examine banking sector and a recent related issue of the sector.
In Australia, financial service industry holds an important position. Banking sector of Australia
comprises four major banks, mutual banks, retail and different foreign banks. Huge
dominance of the four major banks (CBA, NAB, ANZ and Westpac) and high entry barriers
indicates the industry structure similar to an oligopoly market. With passes of time the industry
has become more and more concentrated. Increasing power of dominant banks has led to
money laundering and fraudulent activities on part of the banks. In order to address the issue
Royal commission was established in December, 2017 to conduct enquiry into the
misconduct of banking, superannuation and financial service industry. Recommendation of
the concerned commission increases cost burden of banks, reduces supply of credits and
therefore, may hamper economic growth of Australia.

ECONOMICS2
Table of Contents
1. Introduction.............................................................................................................................3
2. Banking industry background.................................................................................................3
3. Market structure of banking sector.........................................................................................4
4. Royal Commission into the misconduct into the Banking, Superannuation and Financial
Service Industry..........................................................................................................................4
5. Impact of the Royal Commission............................................................................................4
5.1 Impact of Royal Commission on the banking industry......................................................4
5.2 Impact of Royal Commission on the Australian economy................................................6
6. Government Policy..................................................................................................................6
7. Conclusion..............................................................................................................................7
8. List of References...................................................................................................................8