HI5003 Economics for Business: Report on the Australian Banking Sector

This report provides an in-depth analysis of the Australian banking sector, focusing on its market structure, the impact of major banks, and the influence of governmental policies. It examines the dominance of four major banks – Commonwealth Bank of Australia, Westpac Banking Corporation, Australia and New Zealand Banking Group, and National Australia Bank – in the financial landscape. The report delves into the sector's revenue generation, regulatory impacts, and the effects of misconduct allegations, including unsuitable product sales and financial benchmark manipulation. Furthermore, it explores the government's responses through regulatory reforms and the establishment of the Royal Commission to address unethical practices. The analysis also considers the implications of these issues on the Australian economy, including demand and supply shocks related to foreign exchange flows. The report highlights the banking sector's growth while also acknowledging its challenges and potential solutions through effective regulation.

Economics for Business

Introduction
 The main purpose of the assessment is to analyse the banking sector
which operates in the Australian market and the overall impact which
the business has on overall economy as whole.
 The discussion would also be including analysis utilizing the demand
and supply model to get a clear picture of the Australian Market. In
addition to this, the governmental intervention would also be
discussed in details.
 The banking sector can be regarded as one of the most important
sector in any economy and has a vital role to play in the overall
growth and development of the economy as a whole. In the economy
of Australia, the banking sector is dominated by four major banks
which largely handles majority of the financial transactions in the
economy.

Background of the Industry
 Commonwealth Bank of Australia, Westpac Banking
Corporation, Australia and New Zealand Banking Group, and National
Australia Bank are the four major banks which controls all the
operations of a business and contributes to the financial requirements
of the country.
 The banking system in Australia has developed significantly setting
up numerous small banks thereby strengthening the financial sector
of the country. It is also to be noted that the banks also take
additional responsibility for managing the foreign exchange for the
people who are visiting the country.

Market Structure
 The market structure of the banking
sector has been enormous and the
same is still growing which makes
the sector vital in terms of
contribution which the sector makes
to the GDP of the country
 The banking sector also
experiences from abuses and
scandals which has affected the
industry severely. It is therefore for
such reasons that regulations have
been brought into the industry so
that proper control and
accountability can be maintained in
the industry

Market Structure
 The chart shows that the banking
sector has been generating
consistent revenue in terms of
interest and other sources of
income. This shows that the
different banking businesses has
been generating consistent
revenue from the operating
process. It is also to be noted that
in case, the banking sector wants
to continue making such revenues
in the future period but for the
same, the authorities need to
maintain an efficiency level in the
operations of the business

Impact of the Issue on the Banking Sector
and Australian Economy
 The Australian economy withstood the global financial crisis in terms
of the operations of the financial sector in the economy. However, the
banking sector has suffered from allegation of misconduct and the
same are mostly related to sales of products which are unsuitable,
non-adherence to responsible lending standards, improper financial
advice provided to the clients, attempted manipulation of financial
benchmarks.
 It has been alleged by many of the customers of the banks that the
banks are more dedicated towards profits rather than maintaining
honesty in the operational process of the business. One of the major
impacts which has affected the operations of the banking sector is
the lack of interest of the banking sector to manage information
regarding the customers as per the requirement of Know Your
Customers Regulations

Government Policies
 The regulators of the banking sector were instructed to bring about
strict regulations in the banking system so that such a misconduct
does not occur in future. In addition to this, the Royal commission
also was formed so that review of the workings of the four major
banks can done and any unethical practices of such banks can be
brought to light.
 The government has also brought about significant penalties and fine
in case any misconduct is detected in the operations of the business.

Conclusion
 The analysis of the banking system in Australia revealed that the
banking industry has attained significant growth over the last decade
but the same has been affected by misconduct in the banking
industry.
 The discussion further shows the issues which are faced by the
banking sector and how the same can be resolved by the regulators
which are operating in Australia. The analysis also reveals how the
issues which are faced by the banking sector impact the Australian
economy and the demand and supply shocks which is faced by the
economy in terms of foreign exchange flow in the country.

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