Economics for Business: Report on the Australian Banking Sector Issues

This report provides a detailed analysis of the Australian banking sector, focusing on its current state, market structure, and key issues. It highlights the dominance of the 'big four' banks, the findings of the Royal Commission into misconduct, and the resulting impact on the Australian economy. The report examines issues such as unethical practices, irresponsible lending, and the threat of cyberattacks. It also explores the roles of regulatory bodies like APRA, ASIC, and RBA, and the government's policy responses, including the Royal Commission's recommendations. The conclusion emphasizes the challenges facing the Australian banking sector and the potential for new regulations to improve the country's economic position. The report includes references to relevant academic sources and reports.

A U S T R A L I A N B A N K I N G S E C T O R
ECONOMICS FOR
BUSINESS

INTRODUCTION
• The purpose of the presentation is to enlighten
the reader with the details about the Australian
banking system. The Australian banking system is
currently at a degraded position in the
international market. The economy of the country
has also started to deplete because of this cause.
Further, the details about the banking system of
Australia are discussed in the paper (Matthews
2016). More details about the presentation are
mentioned below:

AUSTRALIAN BANKING SECTOR
• The banking sector of Australia is majorly
dominated by four organization that are
Commonwealth Bank, National Australian Bank,
Australia and New Zealand Bank and Westpac
Banking Corporation.
• The ADIs are corporate body that has been
granted authority by the Australian Prudential
Regulation Authority (APRA) to initiate the
banking business activities (RBA.Gov 2019).

CONT.
• Royal Commission into misconduct in the
Banking, Superannuation and Financial Services
Industry is formed to scrutinize and report the
misconduct in the banking sector, superannuation
and financial services sector.

MARKET STRUCTURE
• The market structure of the Australian banking
system involves oligopoly market structure.
• Oligopoly refers to the market structure in which
a small number of firms possess a large share of
the whole market.
• As the four banks dominate the Australian
environment, thus the industry possesses this
structure.

CONT.
• The industry comprises of assets worth USD3.7
trillion of 24 million depositors. The industry
includes 147 authorised deposit-taking
institutions that collectively hold more than 55%
of the financial assets of Australia (Steen,
McGrath, and Wong 2016).

ISSUES IN BANKING SECTOR
• Greed in the banking industry, dodgy financial
advice, irresponsible lending, bribery and lying to the
regulators are some of the issues identified by the
Royal Commission against the Australian banking
sector.
• Unethical actions performed by the banking systems
of the industry reduced the integrity and consumer
satisfaction as well (Brown, and Loosemore 2015).
• The big four banks along with several other small
banks conducted several unethical crimes in the
external environment that affected the economy of
the country.

IMPACTS OF ISSUES ON AUSTRALIA
ECONOMY
• The banking sector highly affected the economy
of the country; instability in this sector affected
the stability of the whole nation as well.
• The threat of cyber attacks aroused in the nation
because of vulnerability of Australian banking
institutions (Schneeberger 2019).

CONT.
• Power started to share in the banking sector
because of this type of activities in the
environment. Financial stress started increasing
because of the banking issue, also the risk
created downturn in the financial position of the
country.

GOVERNMENT POLICY
• APRA, ASIC and RBA are the three governing
bodies present in the Australian banking industry.
• The Royal Commission gave 76 recommendations
to the government so as to implement changes in
the sector and increase the efficiency of business
activities as well.
• The government aimed to change the banking
structure, culture and should litigate power in the
external environment (Clifford Chance 2019).

CONCLUSION
• Thus, in the limelight of above mentioned event,
the fact should be noted that the above
mentioned paper highlighted details about the
Australian banking system. It should be
concluded that the banking sector of Australia is
facing a hard time due to which the economy of
the country is also struggling but the new
regulations will surely improve the position of
Australian economy.

REFERENCES
• Brown, J. and Loosemore, M., 2015. Behavioural factors influencing corrupt action in the Australian construction industry. Engineering,
Construction and Architectural Management, 22(4), pp.372-389.
• Clifford Chance., (2019) How the Banking Royal Commission will change the Australian regulatory landscape [online]. Available from <
https://www.cliffordchance.com/hubs/regulatory-investigations-financial-crime-insights/our-insights/How-the%20Banking-Royal-Commis
sion-will-change-the-Australian-regulatory-landscape.html
> [Accessed on 23 September 2019].
• Ellis, L. and Littrell, C., 2017. Financial Stability in a Low Interest Rate Environment: An Australian Case Study. Monetary Policy and
Financial Stability in a World of Low Interest Rates. Reserve Bank of Australia, Sydney.
• Export.Gov., (2018) Australia - Banking Systems [online]. Available from < https://www.export.gov/article?id=Australia-banking-systems
> [Accessed on 23 September 2019].
• Fairbrother, P., Rafferty, M., Douglas, N. and Wang, L., 2018. Retiring Hurt? The Long-term Costs of Structural Conflicts of Duty and
Interest in the Superannuation Industry.
• Hanrahan, P.A.M.E.L.A., 2018. Legal framework governing aspects of the Australian superannuation system. Background Paper, 25.
• Lattin, A., and Etheredge, A., (2019) Australia: Australian Financial Services Royal Commission: Developments Since The Final Report
[online]. Available from <
http://www.mondaq.com/australia/x/819416/Financial+Services/Australian+Financial+Services+Royal+Commission+Developments+Si
nce+The+Final+Report
> [Accessed on 23 September 2019].
• Lui, A., 2016. Financial stability and prudential regulation: a comparative approach to the UK, US, Canada, Australia and Germany.
Routledge.
• Lumsden, A., 2019. The Wider Implications of the Hayne Report for Corporate Australia. Available at SSRN 3342855.
• Matthews, A., 2016. The financial services industry: Whistleblowing and calls for a royal commission. Precedent (Sydney, NSW), (136),
p.35.
• RBA.Gov., (2019) Financial Stability Review April 2019 [online]. Available from < https://www.rba.gov.au/publications/fsr/2019/apr/>
[Accessed on 23 September 2019].
• Royal Commission, 2018. Royal Commission into Misconduct in the Banking Superannuation and Financial Service Industry. First Round
of Public Hearings: Consumer Lending.
• Schneeberger, C., (2019) Banking in Australia [online]. Available from <
https://orbium.com/orbium-insights/the-impact-of-the-banking-royal-commission-on-australian-banks/> [Accessed on 23 September
2019].