Impact of Royal Commission on Banking Sector and Australian Economy

Verified

Added on  2022/11/14

|14
|872
|94
Presentation
AI Summary
This presentation analyzes the impact of Royal Commission on the banking sector and Australian economy. It covers the oligopoly market structure of the banking sector, the Royal Commission's establishment, its recommendations, and its impact on the banking industry and the Australian economy. It also discusses government policies to restore trust and improve the industry.

Contribute Materials

Your contribution can guide someone’s learning journey. Share your documents today.
Document Page
Economics
Name of the Student
Name of the University
Course ID

Secure Best Marks with AI Grader

Need help grading? Try our AI Grader for instant feedback on your assignments.
Document Page
Introduction
Banking: an important sector
Provides secure system of payment
Four largest and important retail banks
CBA, Westpac, NAB and ANZ
Differs from American system
RBA regulates the payment system
Analyzes the banking sector.
Royal Commission misconduct in the Banking, Superannuation
and Financial Service industry
Document Page
Banking industry background
Competitive, sophisticated and profitable sector
CBA ranks first in terms of riskless return: 18% return
Westpac in fourth position : 11% return
Four major banks
Largest in terms of market capitalization
Contribute to GDP and employment
Deregulation in 1960
Four pillar policy since 1990
Mutual banks, retail banks and foreign banks
Document Page
Market structure of banking
sector
Oligopoly market
Highly concentrated industry structure
Four banks dominates the industry
Westpac, CBA, NAB and ANZ
Over 75% market share
High entry barriers
Regulation, huge capital and dominating market power
HHI index to measure concentration
Has become more and more concentrated

Secure Best Marks with AI Grader

Need help grading? Try our AI Grader for instant feedback on your assignments.
Document Page
Royal Commission into the misconduct into the
Banking, Superannuation and Financial Service
Industry
Established on 14 of December in 2017
Royal Commission act of 1902
Enquiry into the misconduct of banking sector, superannuation and
financial service industry
Greed culture of financial institutions
Lack of regulation
Results in money laundering
Drug syndicates, terrorism financing and other fraudulence
Seven rounds of enquiry
Document Page
Impact on baking industry
Recommendation of Royal Commission
Practical, Purposeful and Responsive recommendation
Enhance the intention and spirit of the law
Strengthen regulatory base of the culture, remuneration and
other practices
Impact the dominance of major banks in Australia
Untended consequences of regulatory reform
Banks were accused of severe allegations
Document Page
Impact on baking industry
NAB found guilty for different scandals
The bank secretly refunded million of dollars
. Licenses of many of staff members were cancelled
Allegation on Westpac
Manipulation of bill swap rate
Fraud lending to elderly pensioners
Regulatory crackdown of loan approval
Review of risk management and internal risk process
At the expense of banks

Paraphrase This Document

Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
Document Page
Impact on baking industry
Higher cost burden for banks
Lower profitability
Higher cost
Began to lay of employees
Disrupts supply of service
Lower supply
Inward shift of supply curve
Higher price
Lower service availability Figure 1: Impact of Royal
Commission on financial service
industry
Document Page
Impact on Australian Economy
Credit crunch
Lack of funds for investment
Lower employment
Revelation of major banks’ misconduct
Hurt consumers’ confidence
Lower aggregate demand
Decline in economic growth
Figure 2: Impact of Royal
Commission on Australian
economy
Document Page
Government Policy
Royal commission: hurts confidence of consumers
Policy to restore trust
Established a Financial System Inquiry
Closely monitor the financial system
Recommendation through FSI
Improvement in the industry
More resilient service
Fair treatment to customers
Innovation and competition

Secure Best Marks with AI Grader

Need help grading? Try our AI Grader for instant feedback on your assignments.
Document Page
Conclusion
Banking sector
Crucial sector
Made of commercial banks, mutual banks, foreign banks, retail
banks and other institution
Banking sector oligopoly
Become more and more concentrated
Royal Commission into the misconduct of Banking,
Superannuation and Financial service industry
Banks face higher regulator cost
Credit crunch and lower economic growth
Document Page
References
Adams, M., Borsellino, G., McCalman, J. and Young, A., 2017. Australia's proposed
banking executive accountability regime: Regulatory panopticon or fail-
safe?. Governance Directions, 69(9), p.528.
Bank, J., Durrani, K. and Hatzvi, E., 2019. Updates to Australia’s Financial
Aggregates’. RBA Bulletin, March, viewed, 19.
Export.gov. 2019. Australia - Banking Systems | export.gov. [online] Available at:
https://www.export.gov/article?id=Australia-banking-systems [Accessed 23 Sep. 2019].
Hayne, K., 2018. Interim report: Royal Commission into misconduct in the banking,
superannuation and financial services industry. Commonwealth of Australia Retrieved
Oct, 1, p.2018.
Janda, M. 2019. The big four spent up to 200 years swallowing other banks, but Hayne
may cause regurgitation. [online] Available at: https://www.abc.net.au/news/2019-02-
01/how-did-the-big-four-banks-become-so-dominant/10767994 [Accessed 24 Sep.
2019].
Document Page
References
Smyth, J. 2019. Australian regulator vows to tackle ‘cosy oligopoly’ of big banks |
Financial Times. [online] Available at: https://www.ft.com/content/d940092a-25f2-
11e9-8ce6-5db4543da632 [Accessed 23 Sep. 2019].
Swanton, T.B., Gainsbury, S.M. and Blaszczynski, A., 2019. The role of financial
institutions in gambling. International Gambling Studies, pp.1-22.
Treasury.gov.au 2019. Restoring trust in Australia’s financial system. [online]
Treasury.gov.au. Available at: https://treasury.gov.au/sites/default/files/2019-03/FSRC-
Government-Response-1.pdf [Accessed 24 Sep. 2019].
Valadkhani, A. and Worthington, A., 2014. Asymmetric behavior of Australia's Big-4
banks in the mortgage market. Economic Modelling, 43, pp.57-66.
Winter, J., 2019. Financial services Royal Commission-impacts on our
profession?. Australian Restructuring Insolvency & Turnaround Association
Journal, 31(1), p.10.

Paraphrase This Document

Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
Document Page
Thank You
1 out of 14
circle_padding
hide_on_mobile
zoom_out_icon
[object Object]

Your All-in-One AI-Powered Toolkit for Academic Success.

Available 24*7 on WhatsApp / Email

[object Object]