Royal Commission Inquiry: Impact on Risk and Share Prices in Finance

This report examines the impact of the Royal Commission inquiry on the Australian banking and finance sector, focusing on its effects on systematic and unsystematic risk, as well as the share prices of AMP, CBA, and NAB. The inquiry, aimed at detecting malpractices, led to increased systematic risk due to investor concerns about ethical conduct and market stability, and unsystematic risk due to potential fines and impacts on future continuity. The analysis of share prices reveals fluctuations following the release of the Royal Commission's interim report in September 2018, with declines observed in the share values of NAB, CBA, and AMP, indicating the significant influence of the inquiry's findings on investor confidence and market valuation. Desklib provides access to similar solved assignments and study resources for students.

Running head: BANKING AND FINANCE
Banking and Finance
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Table of Contents
Indicating how the inquiry affected systematic risk and unsystematic risk:..............................2
Indicating how new reported from Royal Commission move the share price of AMP, CBA,
and NAB:...................................................................................................................................2
Reference:..................................................................................................................................5

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Indicating how the inquiry affected systematic risk and unsystematic risk:
The inquiry of the Royal Commission had a direct impact on the systematic and
unsystematic risk of the financial institutions listed in Australia. Royal commission was
appointed for detecting the malpractices that have been used by the financial institutions,
where reports of the unethical activities have directly affected both the systematic and
unsystematic risk of the companies (Financialservices.royalcommission.gov.au 2019). The
charges of corruptions raise the concern for the investors regarding the ethical activities of the
company, which increase the systematic risk or the market risk, as investors will be panic
with the relevant news. In addition, the unsystematic risk increases, as investor are concerned
regarding their future continuity. The royal commission will impose fines on the financial
instructions, which will increase the unsystematic risk of the companies.
Indicating how new reported from Royal Commission move the share price of AMP,
CBA, and NAB:
Figure 1: Share price of AMP after report of Royal commission
(Source: Au.finance.yahoo.com 2019)

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Figure 2: Share price of CBA after report of Royal commission
(Source: Au.finance.yahoo.com 2019)
Figure 3: Share price of NAB after report of Royal commission
(Source: Au.finance.yahoo.com 2019)
The interim report of Royal Commission has mainly increased the fluctuations in the
share price of NAB, CBA and AMP. The news highlighted by the Royal commission
regarding the fraudulent activities of the above companies has relevantly alter their share
price and decline its value. The declaration of the interim report was mainly conducted in
September 28, 2018 after which the share price of NAB, CBA and AMP have been declining

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over the period of time. From the above figures share price of CBA has been detected to have
increased after the rapid decline in their share price, which was followed by the declaration of
the royal commission interim report.

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Reference:
Au.finance.yahoo.com. (2019). Yahoo is now a part of Oath. [online] Available at:
https://au.finance.yahoo.com/ [Accessed 5 Jan. 2019].
Financialservices.royalcommission.gov.au. (2019). Interim Report . [online] Available at:
https://financialservices.royalcommission.gov.au/Pages/interim-report.aspx [Accessed 5 Jan.
2019].