Banking Misconduct in Australia: An Economic Analysis

This report analyzes misconduct in Australia's banking, superannuation, and financial services industries. It provides a background on the Australian banking industry, including law compliance and government regulations. The report discusses the market structure, dominated by the 'big four' banks, a...Read More

MBA
ASSIGNMENT

Introduction
• The presentation describes misconduct in the Australia`s banking sector,
superannuation, and financial service industry.
• This presentation brings out background of banking industry in Australia through
law compliance and government regulations.
• Further, there is a discussion on model of Aggregate demand and aggregate
supply relating to the banking industry.

Banking industry
• Australia`s banking industry has been dominated by four major banks
named as Westpac banking corporation, New Zealand banking group,
Commonwealth bank of Australia and National Australian Bank (RBA,
2019).
• The proportion of contribution of each type of bank of this sector-
(Source: Cummings, and Wright,
2016)

Market structure
• The market structure of Australian banking sector is monopoly where a
group of organisation (the big four banks of Australia) dominates the
banking sector.
• The cash rate, the repo rate and the standard cash balance (minimum)
has been decided with the mutual understanding of all these four banks
(Cassidy, and Kosev, 2015).

Issues faced by
banks
The Australian banks face several issues such as-
• Ethical issue
Bank employees do not follow laid code of conduct and engages in bribery, insider
trading etc (Cummings, and Wright, 2016).
The issue is related to innovation strategy including lack of payments on time due
to high threat in the sector especially due to exposure to privacy.
Ethically important issue in the banking and finance industry continues to execute
salaries, corruption and bribery issues even in the executive bonuses.

• fluctuation in interest rates of houses
A.) In regards to commonwealth bank, it is seen that forecasting
indicates fair price depreciation, clear slower home loan growth,
conducting concerns, earning hole form the sale of assets, and less
strategic clarity. The cost of funding is one of the major challenge
related to occurrence of notwithstanding of the increased
concentration in the banking industry (JACOBS, 2018).
B). Fall in sizable housing prices in among the two Australian greatest
market that further leads to fall in the new building construction when
weakened housing sentiments. It is the sign of slowing economy
evident in terms of household income growth (Cummings, and Wright,
2016).

Application of Aggregate demand and
aggregate supply
• AG will include government spending on
certain programs, consumption through
purchasing assets with the use of money,
investment in assets or bank itself. For
aggregate demand, it equals to (M): C + I
+ G + X – M, where c refers to
consumption spending, I refers to
investment spending, G refers to
government spending, and X refers to
spending on exports.
• Aggregate supply is the total quantity of
the output, which the organisations will
produce and sell at a certain price level.
(Source: Alhassan,
2015)

(Source: Reserve Bank of Australia,
2018)

Government policies leading
to intervention
• Australia examined consideration by availing business and government by
availing stable set of regulations to act to adopt the changing situations
(Cassidy, and Kosev, 2015).
• Payment system board will find the role of maintaining the reputation of
bank for all the respects and agreeing to the code of conduct. Staff is
responsible for conduction of code of conduct with high level of integrity to
achieve excellence, perform well, and promote interest (Cassidy, and Kosev,
2015).

Referenves • Alhassan, A.L., 2015. Income diversification and
bank efficiency in an emerging market. Managerial
Finance, 41(12), pp.1318-1335.
• Alhassan, A.L., Addisson, G.K. and Asamoah, M.E.,
2015. Market structure, efficiency and profitability
of insurance companies in Ghana. International
Journal of Emerging Markets, 10(4), pp.648-669.
• Cassidy, N. and Kosev, M., 2015. Australia and the
global LNG market. RBA Bulletin, March, pp.33-43.
• Cummings, J.R. and Wright, S., 2016. Effect of
higher capital requirements on the funding costs of
Australian banks. Australian Economic
Review, 49(1), pp.44-53.
• Reserve Bank of Australia, (2018) The Transmission
of Monetary Policy. Available on:
https://www.rba.gov.au/education/resources/explain
ers/the-transmission-of-monetary-policy.html
[Accessed on: 1/09/19]