Advanced Search
MyIDEAS: Login

The Market for Negotiable Certificates of Deposit in Australia: 1973–1980

Contents:

Author Info

  • M.W. Butlin

    (Reserve Bank of Australia)

  • K.M. Hawtrey

    (Reserve Bank of Australia)

Abstract

Liability management by the Australian trading banks is a relatively recent development, largely made possible by the inroduction of negotiable certificates of deposit (NCD’s). The market for NCD’s also acts as an important link in transmitting credit market disturbances to non-bank financial intermediaries. Relatively little attention has been paid to analysing the working of this market in Australia. This paper presents and estimates two models of the NCD market. In the first case the hypothesis of short term rationing, that arises from various restrictions on the operation of the market, is tested. The second model assumes that the market clears in the short run but adjusts with a lag to the desired long run position. Our results favour the second model. In addition, the demand for NCDs by the non-bank public depends on wealth and interest rates. The supply of NCD’s by the banks depends on the banks liquidity position and on interest rates. The results suggest that banks may use asset management instead of liability management when rates rise on liquid assets of the banks. Adjustment by the non-bank public to the long run demand is instantaneous, while the banks adjust with a lag. Our results suggest that approximately 84 per cent of the adjustment in the banks’ supply occurs within one year.

Download Info

If 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.
File URL: http://www.rba.gov.au/publications/rdp/1982/8202.html
Download Restriction: no

Bibliographic Info

Paper provided by Reserve Bank of Australia in its series RBA Research Discussion Papers with number rdp8202.

as in new window
Length:
Date of creation: Jan 1982
Date of revision:
Handle: RePEc:rba:rbardp:rdp8202

Contact details of provider:
Postal: GPO Box 3947, Sydney NSW 2001
Phone: 61-2-9551-8111
Fax: 61-2-9551-8000
Email:
Web page: http://www.rba.gov.au/
More information through EDIRC

Order Information:
Web: http://www.rba.gov.au/forms/rdp-order-form/

Related research

Keywords:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:rba:rbardp:rdp8202. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Paula Drew).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.