This economics report analyzes the Australian banking sector, focusing on its structure, characterized by the dominance of four major banks, and its oligopolistic nature. It examines the recent Royal Commission into misconduct within the banking, superannuation, and financial services industry, highlighting issues like money laundering and fraudulent activities. The report assesses the commission's impact on the banking industry, including increased costs, reduced credit supply, and potential effects on the Australian economy, such as slower growth and recessionary pressures. The report includes an analysis of the market structure, key players, and the government's policy responses to the commission's recommendations. The report uses demand and supply frameworks to model the impact of the Royal Commission on the financial service industry. The findings suggest that the Royal Commission's recommendations could lead to a credit crunch, decreased consumer confidence, and a decline in aggregate demand, potentially impacting the Australian economy negatively.
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