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The Provision of Financial Services - Trends, Prospects and Implications

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Author Info
Warren Tease (Reserve Bank of Australia)
Jenny Wilkinson (Reserve Bank of Australia)
Abstract

The paper considers recent trends in the provision of finance and the factors that are likely to influence its future course. It emphasises how the interaction between the allocation of household wealth and the financing needs of firms shape the structure and evolution of financial systems. The paper focuses on the experiences of banks, and argues that as the 1990s proceed they will face increased competition on both sides of their balance sheets. However, several factors are likely to provide banks some competitive advantage. The most important is that a large pool of borrowers cannot raise funds other than through banks. On the asset side of their balance sheets, the intermediation of funds to small and medium-sized businesses is thus a core function which differentiates banks from other financial institutions and the securities markets generally. But banks also have advantages on the liabilities side of their balance sheets, as they offer depositors a safe and highly liquid repository for their funds. The paper argues that the extent to which banks remain the institutional core of the financial system will depend on their ability to perform their traditional lending role. It concludes by speculating about the implications for the stability of the financial system of the structural changes which have occurred.

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Paper provided by Reserve Bank of Australia in its series RBA Research Discussion Papers with number rdp9315.

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Date of creation: Dec 1993
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Handle: RePEc:rba:rbardp:rdp9315

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References listed on IDEAS
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.:
  1. Karen Mills & Steve Morling & Warren Tease, 1993. "Balance Sheet Restructuring and Investment," RBA Research Discussion Papers rdp9308, Reserve Bank of Australia. [Downloadable!]
  2. Gertler, Mark, 1988. "Financial Structure and Aggregate Economic Activity: An Overview," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 20(3), pages 559-88, August. [Downloadable!] (restricted)
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  3. Edwards, F.R., 1993. "Financial Markets in Transition -- or the Decline of Commercial Banking," Papers 93-06, Columbia - Graduate School of Business.
  4. Miller, Merton H., 1986. "Financial Innovation: The Last Twenty Years and the Next," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 21(04), pages 459-471, December. [Downloadable!]
  5. Malcolm Edey & Robin Foster & Ian Macfarlane, 1991. "The Role of Superannuation in the Financial Sector and in Aggregate Saving: A Review of Recent Trends," RBA Research Discussion Papers rdp9112, Reserve Bank of Australia. [Downloadable!]
  6. Franklin R. Edwards, 1993. "Financial markets in transition - or the decline of commercial banking," Proceedings, Federal Reserve Bank of Kansas City, pages 5-69.
  7. John H. Boyd & Mark Gertler, 1993. "U.S. Commercial Banking: Trends, Cycles, and Policy," NBER Working Papers 4404, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. Frederic S. Mishkin, 1991. "Financial Innovation and Current Trends in U.S. Financial Markets," NBER Working Papers 3323, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. Adrian Blundell-Wignall & Marianne Gizycki, 1992. "Credit Supply and Demand and the Australian Economy," RBA Research Discussion Papers rdp9208, Reserve Bank of Australia. [Downloadable!]
  10. Paul Francis O'Brien & Frank Browne, 1992. "A "Credit Crunch"?: The Recent Slowdown in Bank Lending and Its Implications for Monetary Policy," OECD Economics Department Working Papers 107, OECD, Economics Department. [Downloadable!]
  11. Diamond, Douglas W, 1984. "Financial Intermediation and Delegated Monitoring," Review of Economic Studies, Blackwell Publishing, vol. 51(3), pages 393-414, July. [Downloadable!] (restricted)
  12. Ross, Stephen A, 1989. " Institutional Markets, Financial Marketing, and Financial Innovation," Journal of Finance, American Finance Association, vol. 44(3), pages 541-56, July. [Downloadable!] (restricted)
  13. Diamond, Douglas W & Dybvig, Philip H, 1983. "Bank Runs, Deposit Insurance, and Liquidity," Journal of Political Economy, University of Chicago Press, vol. 91(3), pages 401-19, June. [Downloadable!] (restricted)
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  14. Bencivenga, Valerie R & Smith, Bruce D, 1991. "Financial Intermediation and Endogenous Growth," Review of Economic Studies, Blackwell Publishing, vol. 58(2), pages 195-209, April. [Downloadable!] (restricted)
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  15. Gertler, M.L. & Hubbard, R.G., 1988. "Financial Factors In Business Fluctuations," Papers fb-_88-37, Columbia - Graduate School of Business.
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Cited by:
(explanations, 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.)

  1. Malcolm Edey & John Simon, 1996. "Australia's Retirement Income System: Implications for Saving and Capital Markets," RBA Research Discussion Papers rdp9603, Reserve Bank of Australia. [Downloadable!]
    Other versions:
  2. Malcolm Edey & Brian Gray, 1996. "The Evolving Structure of the Australian Financial System," RBA Research Discussion Papers rdp9605, Reserve Bank of Australia. [Downloadable!]
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