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Australian Financial System Analysis

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Future of Financial Institutions

Beata Bujalska 11200504

2014-09-21

Table of Content
Executive Summary 3
1. Overview of Australian Financial Institutions. 4
2. Overview of International Banking System. 5
3. Overview of Shadow Banking. 6
3.1. Viability of Shadow Banking in Australia. 6
3.2. Viability of Shadow Banking internationally. 6
3.3. Comparison of Shadow Banking internationally and in Australia. 6
4. Conclusions. 6
References 7

Executive Summary 1. Overview of Australian Financial Institutions.
Financial system is a key influencer of the health and efficiency of an economy (Kidwell, et al., 2014, p 2). The definition of financial system is equitable with its role. It is simple a system that gather surplus funds from households …show more content…
Financial markets are the markets for buying and selling financial instruments (Kidwell, et al., 2014, p 5). In other words, financial market is like any other market, where people buy and sell, bargain or win and lose. Money is a widely acceptable instrument, that we exchange for goods and services. Financial Institutions are all intermediaries, that buy financial claims from DSU and sell them to SSU. There are many different types of financial institutions on the Australian market. According to Reserve Bank of Australia (RBA), there are three main types of institutions: Authorised Deposit-taking Institutions (ADI), Non-ADIs Financial Institutions and Insurers and Fund Managers (Reserve Bank of Australia, 2014). Table 1.1 Australian Financial Institutions distinguishes different types of institution with short …show more content…
The Graph 3.1. shows that Australian shadow banking system has always oscillated around 25%. Currently shadow banking share of total financial assets is about 15-20% as at 2011. This share has systematically decreased since its peak (25%) in 2007. In my opinion it can be caused by financial crisis and more restricted regulations after the crisis. According to the graph the main types of non-bank institutions consist of Registered Financial Corporations (RFC), Securitisers and Investment Funds.
RFCs are entities that intermediates between lenders and borrowers. There are currently over 300 RFCs in Australia, accounting for around 5 per cent of financial system assets as at 2011. Securitisers or Securitisation Vehicles accounted for around 3 per cent of financial system assets as at 2011. Investment funds, including money market funds and hedge funds, accounted for around 6 per cent of financial system assets as at 2011 (Reserved Bank of Austrlia, 2012).
3.2. Viability of Shadow Banking

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