Economics for Business: Banking and Superannuation Industry Report

This report provides a comprehensive analysis of the banking and superannuation industry, with a specific focus on the Bank of Queensland. It begins with an introduction outlining the scope of the report, which includes an examination of the industry's market structure, factors influencing demand ...Read More

BANKING AND
SUPERANNUATION
SERVICE
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Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Description of Bank of Queensland.............................................................................................3
Background of industry...............................................................................................................3
Market structure of industry........................................................................................................4
Factor that influence demand for company product....................................................................5
Factor that influence supply of company items...........................................................................6
Elasticity......................................................................................................................................7
Impact of an event on industry....................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
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INTRODUCTION
The report is based on the banking and superannuation industry on misconduct of practices,
enterprise activities. It also observed the asymmetry of power, information that frequently
occurrences within practice of finance industry. The documentation will outline the culture of
company through them add on insurance remuneration. In order to increase the productivity and
profitability in global marketplace. The assignment will describe about the overview of
company, back ground of industry effectively and efficiently. Furthermore, it will concern about
the market structure for identifying the strength, weakness of business. However, it will identify
the different factors that influence the demand of enterprise product and supply chain. In order to
identify the impact on the event on the industry.
MAIN BODY
Description of Bank of Queensland
The bank of Queensland Limited is based on Australian public company which mainly
provide the retail and commercial banking, financial and insurance services. The headquartered
of bank in Newstead, Brisbane. It is one of the branches that running by local owner manager. It
means they are running a small enterprise and understand what it means to deliver personal
services (Atkins and Charlton, 2019). The organization operates a large number of brand which
offer a diverse range of product as well as services. The primary aim of financial company is to
provide wide range of great value. It became easier to understand and sort out as well as
compelling bank. The bank of Queensland Limited pride themselves on building long-term
customer relationship. It is based on the mutual respect as well as understanding. There are more
than 160 branches across Australia, each and every one find to know the demand of potential
customer. It also recognising things as they required (Atkins and Charlton, 2019).
Existing consumer can hold the data across their bank account and assets, liabilities. A
Queensland Limited has conducted the program to update value of real estate. In order to grow
the business substantially. Moreover, offering various services such as loan, commercial and
financial banking services.
Background of industry
A bank of Queensland was established in 1863, collapsed in 1866 and closing their door
due to financial depression. The Brisbane permanent advantage, benefits for building and
investment society which was incorporate in 1887 (Atkins and Charlton, 2019). It is based on the
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financial as well as banking industry that provide various facilities and service to customer. It
remained a saving bank until trading bank license was obtained in 1942 (O'Brien, 2019).
Afterwards, the organization has acquired the electronic switching to increase profitability in
global marketplace. The bank sold its 6.2 million share and converted in the Queensland on its
operations. In some case, they will purchase the equipment that always support for improving
financial banking services in Australia. It also resolved the ATM solution.
A bank of Queensland is based on the institution which accepts deposits from general
public and extends load to the households. Thus, there are money traders with process of
development and also increasing or diversifying the financial industry. In past decade, it is very
difficult to provide universally acceptable to define banking (Hargovan, 2019). The organization
is providing the better service to customer where receiving money on current deposit account,
paying as well as collecting the cheque. In past years, it has increased the use of credit based
banking so that transformed into network globally. A bank of Queensland take place in Australia
economic development in realistic manner. The financial system of Australia has shown as great
deal of resilience. In order to flexible exchange rate which become higher.
Market structure of industry
It is an important determinant of both consumer welfare as well as competitiveness. In this
way, it can examine the market structure of Australian banking industry over last 3-5 years. As
analysis the market structure by using framework as market size grow and related to quality of
investments whenever quality required for incur fixed price/cost. Oligopoly and monopolistic
competition are considered the most common structure that exist in Australian market. Banking
is an important industry which are dominating other enterprises (Sourdin and Atherton, 2019 ).
For Example- A Bank of Queensland also used the oligopoly market structure which providing
the loan on vehicle, commercial buildings.
A Queensland bank has formed kind of cartel arrangement that always support for
establishing relationship with shareholders (Sourdin and Atherton, 2019 ). The primary aim is to
increase profit which can be possible if bank act as monopoly but since arrangement will be
made to increase the profit of shareholders.
Market structure
The Australian banking industry has one of highest barriers to enter in marketplace. It
happen due to only various capital, regulatory requirements but consider highest level of market
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power (Atkins and Charlton, 2019). There will be highest mutual shareholder ownership across
banks. In this way, it is important to find out interest and achieving the maximum profit. On the
other hand, organizational profit has been increased when it act as monopolist. Currently, it has
begun reforming more competitive behaviour. As a result, it can easily identifying the more
transparency and allows customer to move another one.
Market concentration
The competitiveness in market will be determined by using HHI. It is to be consider an
efficient concept that can easily measure the size of company in relation to industry. The range
of measurement exists between 0 and 1. The Australian banking industry had used HHI between
1000–1500. The market concentration has been increased over years because of acquisition
activities.
The effect of increased market concentration that means develop situation of economic
inefficiencies as market shift away from competitive result or outcome. Therefore, banking
industry adapt the policies and eliminating the high barriers (Sourdin and Atherton, 2019). As
resulting, it is increasing divergence from competitive environment. However, it is likely
continuing to fuel the increasing the profitability and productivity of banking.
Factor that influence demand for company product
The banking sector dominates the factors that is crucial for analysis of how demand and supply
component affects the growth in international bank credit (Mehta, 2020). Henceforth, the
determinants that influence the demand for product and services are outlined in following
context as are-:
 Income- If the income of the consumer enhances than buyers purchase the product as he
has more money to invest. It leads to drive the demand for commodities that enhances
accordingly (Ozioma, and Marcus, 2020). In the banking industry, if the income of the
consumer is attractive than he makes the big investment in banking schemes. Therefore,
demand curve tends to negative with rise in income.
 Interest rates- the rate of interest also affects the level of spending on consumer goods
substantially. Additionally, higher interest rates make the purchase more expensive and
this also leads to deter these expenditures (Brandl, 2020). If the rerun interest rate is
attractive than consumer willing to invest in product or scheme.
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 Consumer confidence- In the banking and superannuation services the another crucial
factor that affects the demand of the commodities is for consumer goods. As per the
current financial situation, consumers are more likely to purchase greater amount of
consumer products when they feel confident in terms to overall condition of the economy
(Choi and Choi, 2020). In addition to this, the high level of confidence of consumer can
affect the consumer inclination that lead towards to make major purchase to use credit to
make purchase. However, the demand for the banking product enhances when the
economy producing the goods is growing.
 Inflation- In a country with enough income, bank face economic hurdles and that can be
salvaged by respective legal authorities (Horst and Neyer, 2020). If the rate of inflation is
high, bank has to suffer. This is because inflation leads to affect the value of currency and
also has ripple effects on the working of banking sector.
 Transaction cost for stocks and bonds- This is very typical or expensive to quickly buy
and sell stocks and bonds that are less desirable. Hence, individual want to hold more of
wealth in the form of money and this leads to demand for money will continue enhance.
Therefore, there are some of the factor that leads to enhance the demand for money and
this is outlined in below context manner as are-:
 Reduction in the interest rates.
 Rise in demand for consumer spending.
 Increase in the uncertainty about the future and future opportunities.
 Rise in inflation that cause increase in nominal demand of money but the real demand of
money tends to constant.
Factor that influence supply of company items
There are inclusive of the components such as are-:
Open market operations- It is conducted by the central banks as this carried out and
implements the monetary policy. However, the open market department of the central bank is to
sells and buys the treasury securities with the series of primary dealers of securities (Tang and
Yang, 2020). This is defined as the primary tool that uses by the central bank to execution of
monetary policy. Hence, the process of selling and buying treasure securities throughout the
open market operation the central bank either creates or can destroys the legal reserves in
banking system.
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Reserve requirements- In this, it can be stated that the central bank has the power to set the
reserve needs that apply to differ kind of deposit that held in depository institution (Bashir,
Yugang and Hussain, 2020). However, the changes in need of reserve do not affect the amount
of the legal reserve in the banking system. Additionally, change in need of reserve affects the
money expansion process.
Policy interest rate set by the central bank- The rate of interest highly influences the how
number of the householder and enterprises are willing and able to borrow (Mehta, 2020). In
addition to this the money in the modern economy created by commercial banks’ lending so that
the rate of interest does have bearing on the supply of money.
Income and credit- Changes in the income and availability of the credit can affect the supply
and demand in the major context. During the time of recession, when the few job opportunities
avail than there is less money to spend, in this condition low investment in banking products will
be made by the consumers (Ozioma, and Marcus, 2020). In addition to this, the credit availability
is also less due to inability of the average person to qualify for the loan. At the time when the
economy is boom, unemployment is very low and individuals starts to spending the money
readily.
Government regulation- The rules and regulation of the legal entities can impact the supply and
demand factor of banking industry (Brandl, 2020). Thus, high interest rates, the norms on
investment scheme all affects the demand and supply attributes in market.
Elasticity
This is term that defined as to degree to which quantity demanded varied due to changes in
price or any other factor that influence the demand of the commodity. In addition to this, there
are mainly three kinds of the elasticity of demand that is inclusive of the elasticity of markets,
cross elasticity of the market and income elasticity of market (Choi and Choi, 2020). However,
the banking industry generates income from charging the interest rates by lending loans and
mortgages, dealings of foreign exchange and other factors of money markets. In addition to this,
it can be stated that the financial institution faces the varied number of cost structure and a
different set of objectives that works as to influence pricing decisions. For example, this can be
stated that the risk profile of one financial institution is very different from one another along
with the diverse strengths and weaknesses that highly impacts pricing
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Impact of an event on industry
The income elasticity of the market has an effect on lending decision and deposit of the
economy. However, this can be said that the household earning will be deposit in the depository
and non-depository institutions (Horst and Neyer, 2020). Additionally, the component of the
banking industry majorly influencing the spending ability that covers as taxation, lending rates
all these have the major influence. Thus, increase in the rate of interest can stimulate the more
savings and people would spend less. Rate of interest also have effect on the cost of funding that
operating debt schemes that covers bank loans and mortgages etc. For example- The
enhancement in the lending rates will shift the fund of consumers towards to the high mortgage
and loan payments.
However, the price elasticity within the banking industry impacts issues as housing,
mortgages, foreign exchange and issue of the rate of lending. However, the components that
influence the economy can also affect the lending rates to be used. If there is rise in demand for
the homes than the price will get enhanced. If the components are affecting the economy, that are
as inflation, rate of lending tends to be enhanced to discourage individuals from undertaking
borrowing (Tang and Yang, 2020). Therefore, the general price would also get enhanced due to
the inflation and this also leads to lowering the quantity demanded. Mortgage interest rates affect
the price elasticity of the houses. If the prices are low than the consumer demands the more
homes. Additionally, this can be stated that price elasticity of the market can influence the rate of
interest. Thus, intervention of the monetary and fiscal policies may have effect of a downturn or
may boost the economy depending on the rate of lending. However, the consumers can lead
towards to increasingly choosing to obtain the loan from non-depository institution.
CONCLUSION
From the above report, this can be summarized that the banking sector is an industry and
section of economy that devoted to holding the financial assets. Banking sector are obliged to
adhered with the specific legal authorities’ regulations. Therefore, working of the banking sector
is key to maintain public trust. The assignment has based on the overview of company, back
ground of industry effectively and efficiently. Furthermore, has laid focus on the concern about
the market structure for identifying the strength, weakness of business. However, this has also
identified the different factors that influence the demand of enterprise product and supply chain.
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REFERENCES
Book and Journals
Atkins, S. and Charlton, P., 2019. Chartered secretary: The banking royal commission final
report: Culture and governance implications. Governance Directions. 71(2). p.65.
O'Brien, J., 2019. “Because They Could”: trust, integrity, and purpose in the regulation of
corporate governance in the aftermath of the Royal Commission into Misconduct in the
Banking, Superannuation and Financial Services Industry. Law and Financial Markets
Review. 13(2-3). pp.141-156.
Hargovan, A., 2019. Chartered secretary: Banking royal commission final report: Cultural issues
and implications. Governance Directions. 71(3). p.128.
Sourdin, T. and Atherton, M., 2019. Vulnerability and dispute resolution in the banking and
finance sector. Social Business. 9(1). pp.69-91.
Mehta, J., 2020. The Future of the Banking Industry and Management Impact. In Paradigm Shift
in Management Philosophy (pp. 197-211). Palgrave Macmillan, Cham.
Ozioma, N.D. and Marcus, A.O., 2020. MARKETING PUBLIC RELATIONS AND
CONSUMER PATRONAGE OF BANK PRODUCTS IN ANAMBRA STATE,
NIGERIA. MARKETING. 3(1). pp.1-19.
Brandl, M., 2020. Money, Banking, Financial Markets & Institutions. Cengage Learning.
Choi, D.B. and Choi, H.S., 2020. The effect of monetary policy on bank wholesale
funding. Management Science.
Horst, M. and Neyer, U., 2020. The impact of quantitative easing on bank loan supply and
monetary policy implementation in the euro area. Review of Economics. 70(3). pp.229-
265.
Tang, R. and Yang, L., 2020. Financing strategy in fresh product supply chains under e-
commerce environment. Electronic Commerce Research and Applications. 39. p.100911.
Bashir, U., Yugang, Y. and Hussain, M., 2020. Role of bank heterogeneity and market structure
in transmitting monetary policy via bank lending channel: empirical evidence from
Chinese banking sector. Post-Communist Economies. pp.1-24.
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