Understanding financial system efficiency in New Zealand
AbstractThis article examines the concept of financial system efficiency in the New Zealand context. The primary function of the financial system is to facilitate the allocation of society’s scarce resources, both across the economic system and over time, in an environment of inherent uncertainty. If the financial system performs this role well, then it will be contributing to economic growth and prosperity in a positive way. The article develops a conceptual framework for evaluating financial system efficiency and applies this to the New Zealand financial system. In particular, we focus on whether the high return on equity enjoyed by the New Zealand banking system, relative to other jurisdictions, is indicative of a banking system that is any less competitive and efficient than elsewhere. Our research to date suggests these high relative returns can be explained by a number of factors including relatively high cost of capital in New Zealand and the implicit support the major banks receive from their Australian parents.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Reserve Bank of New Zealand in its journal Reserve Bank of New Zealand Bulletin.
Volume (Year): 74 (2011)
Issue (Month): (June)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Berger, Allen N. & Klapper, Leora F. & Turk-Ariss, Rima, 2008.
"Bank competition and financial stability,"
Policy Research Working Paper Series
4696, The World Bank.
- Toby Fiennes & Cavan O'Connor-Close, 2012. "The evolution of prudential supervision in New Zealand," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 75, pages 5-13, March.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Reserve Bank of New Zealand Knowledge Centre).
If references are entirely missing, you can add them using this form.