Prudential supervision of the Australian banking industry : credit ratings, the market alternative

White, Jeremy R. P. (1992). Prudential supervision of the Australian banking industry : credit ratings, the market alternative Honours Thesis, School of Economics, The University of Queensland.

       
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Author White, Jeremy R. P.
Thesis Title Prudential supervision of the Australian banking industry : credit ratings, the market alternative
School, Centre or Institute School of Economics
Institution The University of Queensland
Publication date 1992
Thesis type Honours Thesis
Total pages 147
Language eng
Subjects 14 Economics
Formatted abstract
      Anon - “You pay your money and you take your chances."


      Since the deregulation of the financial system in Australia in 1984, many changes have taken place in the Australian economy. This is especially evident in the Reserve Bank of Australia's role as a prudential regulator for the Australian banking industry. The apparent removal of formal constraints over the Australian banking industry has been matched by an increase in the amount of prudential controls implemented by the Reserve Bank.

      Central to these controls is the implementation of the risk-based capital adequacy requirement. This thesis aims to show how this requirement has possibly distorted the provision of credit in Australia and how the current prudential requirements are ineffective in their main objectives to protect bank depositors and the stability of the financial system. The alternative of a market-based control such as credit ratings is proposed, and theory from information economics is used to support this hypothesis.

      Information asymmetries pose the largest problem for investors and borrowers alike in determining which institution to deal with and what risks they may face. Credit ratings help reduce these information problems which in turn will help provide a safer, more efficient, financial system.

Document type: Thesis
Collection: UQ Theses (non-RHD) - UQ staff and students only
 
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Created: Fri, 03 Dec 2010, 14:20:50 EST by Muhammad Noman Ali on behalf of Social Sciences and Humanities Library Service