banking and risk management custom essay

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We can classify financial institutions into several groups; namely commercial banks, finance companies, credit unions, superannuation funds. This could be based on where these institutions source their funds, their main business or their customers.

PART A (20 marks) — word limit : 1000 words
I. What is the market share of each of the different groups of financial institution in the Australian financial system?
II. Where do the commercial banks source their funds? How has the funding structure to the commercial banks changed over the years?
You should use recent figures (data must be at least extended to 2010) to justify your arguments. You can use one or as many criteria as you wish such as deposit taking, holding of financial assets, loans (aggregated, business or just consumer). These data are usually available from Reserve Bank, Australian Prudential Regulatory Authority (APRA) or Australia Bureau of Statistics (ABS) Financial Accounts.
(section I & II, 5 marks)
III. There is a stream of literature that believes when certain participants are ?too big to fail?, a failure of a particular company/industry would be detriment to the overall well being of the economy. What are some of the arguments that support the arguments that banks are too big to fail? What are some of the policies that have been proposed to ensure these banks do not fail?
Using the data you have collected for section I and combining the literature from section III, do you think some of the commercial banks in Australian (as compared to the other financial institutions) are too large to fail? Provide some justifications/discussions to your answer. (you are expected to cite at least 3 journal articles or policy paper)
(10 marks)
IV. The major banks recently adjust their lending rates independently from Reserve Bank’s monetary policy decisions. Such decision has drawn a lot of media attention, criticisms by the public and politicians. What were the banks? responses to these criticisms? Using the data from section II and your own research on current banks funding, do you agree to the criticisms? Or do you think the banks have a case?
(5 marks)

PART B (10 marks) — word limit : 500 words
The Basel Banking supervision committee has proposed the Basle III standards.
– Compare and discuss the differences between Basle II (and Basel I, if you wish) and the
Basle III.
– What are the major difficulties faced by the financial institutions in trying to meet these new
(10 marks)

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