FIN202: Fundamentals of Asset Valuation

Added on -2020-02-23

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RUNNING HEAD: REGULATION OF AUSTRALIAN BANKS
PAST, PRESENT AND FUTURE OF
AUSTRALIAN BANK’S REGULATIONS
REGULATION OF AUSTRALIAN BANKS
1
Table of Contents
Introduction........................................................................................................... 1
History of Australian Banks’ Regulations...............................................................1
Present Structure of Bank’s Regulations................................................................2
Future of Banking Regulations in Australia............................................................4
Recommendations for future regulation in Australian Banks.................................6
Supervision over regulations.............................................................................. 6
Regulations and financial innovation..................................................................6
Conclusions............................................................................................................ 6
References............................................................................................................. 8
REGULATION OF AUSTRALIAN BANKS
2
Introduction
Banking is a major sector in the economy of Australia and it contributes significant portion in
the country’s economic condition. The financial sector of Australia is extremely liquid strong
and sophisticated and therefore it is ranked at the fourth position in the entire world for the
size of its pool of assets i.e. the investments funds. The banking sector of Australia
constitutes mainly four prime banks which are as follows:
Commonwealth Bank of Australia
Westpac Banking Corporation
National Australia Bank
Australia and New Zealand Banking Group
Due to the financial stability maintained by the banking companies in Australia and the
activities of finance such as lending and borrowing functions, the financial sector of Australia
has been rated as the best financial centres in the world. Apart from the activities of financial
intermediation, the banks in Australia are also involve in other functions such as stock
broking activities, financial market trading, insurance activities etc. The banking regulation
includes different areas such as the legislative framework under which the Banks and other
financial institutions are working, the regulatory bodies that are controlling the banking
sector, the supervisory bodies of financial sector, licensing policies of banking industries etc.
History of Australian Banks’ Regulations
The first bank that was started in Australia in 1817 was the bank of New South Wales. The
increase in the values of the properties in Australia caused the crisis in Australian bank. In the
past, the regulation in the banking sector was not much stringent and there was no tight
control of government over the banks of Australia due to which many commercial banks
were failed to operate. The country had to face huge depression in 1930 due which there a
series of bank failures. But after the depression’s end, the banking regulation in Australia was
made strict which made it nearly impossible to set up any branch in Australia for the foreign
owned banks. Resultantly, the banks in Australia were quite less in comparison to the other
countries. With the tight regulation, the Australian banks were bifurcated in two main
categories i.e. the Savings Banks and the Trading Bank (Joshi, Cahill & Sidhu, 2010). Since the
regulatory framework for the banking industry was getting extremely strict, another type of
non-banking finance organisations in financial system were started getting developed like the

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