Essays on The Financial System in Australia Case Study

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The paper 'The Financial System in Australia" is a perfect example of a finance and accounting case study.   A lucrative business idea must consider some factors before a decision is made on whether to make an investment or avoid. For instance, business consultants often look at the market stability of specific ventures before they can advise clients on the expected outcomes in case an investment is made. Specific ventures may not be adequate in providing solid information to rely on when making an investment decision since other factors such as the general economic stability are also important.

Other factors such as interest rates and competitiveness of the venture investor targets are also very important. In developing this report, it is considered that the best interest of the client is prioritized in the sense the profit is the main desire. This paper will analyze some economic parameters in Australia that include the banking sector to determine the best bank to invest between Bank of Queensland or Bendigo and Adelaide Bank. Australia’ s Economy at a Glance It is important to consider reviewing the Australia economy and understand the various trends that shape up this Asian economy.

First, one would appreciate that the government main source of revenue is derived from the nominal income growth. According to the Australian Government (2016), one of the most common trends in recent year is the fall of commodity prices that have contributed to increased concern as the Chinese economy continue to produce cheaper commodities. In 2013, the Australian dollar recorded a gradual fall in value to record a 16.2 percent decline compared to the USD and a massive 17.9 percent dollar compared to the Euro.

The decline of the value can be traced back to the great global recession. However, it can also be acknowledged that many investors in the past have opted to invest in Australia branding the economy as a safe heaven. The increased investment has been linked to the support from the central bank to reduce the decline in the sovereign bond market. This makes the foreign investors experience increased risk tolerance, which implies that the Australian economy would be a good pick for any visionary investor. The financial system in Australia According to Porter (2014), the Australian Banking industry has recorded some critical issues that any investor would want to review before making a decision.

Apparently, there have been some positive trends in the banking sector as far as asset performance is concerned. Asset performance in the banking industry has been consistent regarding growth. The same can be said the profitability linked to the growth of asset performance. Many banks in Australia have managed to prove that they have high operational efficiencies, which is a good indicator for many investors.

The operational efficiencies are evident when comparing the cost to income ratios of most banks. The banking industry seems to get much of the benefits from a unique situation termed as the wholesale fund, whose improvement is responsible for reducing the competition in the deposit market. As far as asset performance in Australia is concerned, it has been established that asset performance is the primary indicator of the performance of the Banking sector in Australia. The investors willing to invest in a Bank must pay keen attention to this area.

The Australian banking sector has generally recorded positive results. In the Banking sector, it is of prime significance to consider the ration of the non-performing assets to that of the total loans. With a ratio of 1:1, it can be said that the banking sector is performing well. An investor must closely consider the non-performing assets as well as the total loans that the bank has issued to its customers. One factor that has contributed to the reduced cases of impaired commercial property loans is the fact that there has been strong recovery from the property prices.

References

Australian Government. (2016). Why Australia?: Benchmark Report. Retrieved from Australian Trade Commission: https://www.austrade.gov.au/ArticleDocuments/3823/Australia-Benchmark-Report.pdf.aspx

Bank of Queensland. (2015). Bank of Queensland Annual Report. Retrieved from Annual Report.

Bendigo and Adelaide Bank Group. (2015). Bendigo and Adelaide Bank Group Annual Financial Report. Retrieved from Annual Financial Report.

Housing Industry Association. (2013). Decline of the Aussie Dollar: where to from here? Retrieved from Economics Group: https://hia.com.au/~/media/HIA%20Website/Files/IndustryBusiness/Economic/research/Decline%20of%20the%20Aussie%20Dollar%202013.ashx

Porter, R. (2014). 2014 Banking Industry Outlook Repositioning for growth Agility in a re-regulated world. Retrieved from Deloitte Australia: http://www2.deloitte.com/content/dam/Deloitte/au/Documents/financial-services/deloitte-au-fs-2014-banking-industry-outlook-0214.pdf

Reserve Bank of Australia. (2014). Financial Stability Review. Retrieved from Reserve Bank of Australia: http://www.rba.gov.au/publications/fsr/2014/sep/pdf/0914.pdf

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