The Provision of Financial Services – Trends, Prospects and Implications
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.
|Date of creation:||Dec 1993|
|Contact details of provider:|| Postal: GPO Box 3947, Sydney NSW 2001|
Web page: http://www.rba.gov.au/
More information through EDIRC
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.:
- 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.
- Charles Goodhart, 1988. "The Evolution of Central Banks," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262570734, December.
- 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 401-419, June.
- Leland, Hayne E & Pyle, David H, 1977.
"Informational Asymmetries, Financial Structure, and Financial Intermediation,"
Journal of Finance,
American Finance Association, vol. 32(2), pages 371-387, May.
- Hayne E. Leland and David H. Pyle., 1976. "Informational Asymmetries, Financial Structure, and Financial Intermediation," Research Program in Finance Working Papers 41, University of California at Berkeley.
- Valerie R. Bencivenga & Bruce D. Smith, 1991.
"Financial Intermediation and Endogenous Growth,"
Review of Economic Studies,
Oxford University Press, vol. 58(2), pages 195-209.
- 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 Publishing.
- Allen B. Frankel & John D. Montgomery, 1991. "Financial Structure: An International Persepective," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 257-310.
- Mark L. Gertler, 1988.
"Financial Structure and Aggregate Economic Activity: An Overview,"
NBER Working Papers
2559, National Bureau of Economic Research, Inc.
- Gertler, Mark, 1988. "Financial Structure and Aggregate Economic Activity: An Overview," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 20(3), pages 559-588, August.
- Mark Gertler, 1988. "Financial structure and aggregate economic activity: an overview," Proceedings, Federal Reserve Bank of Cleveland, pages 559-596.
- Zvi Bodie, 1989. "Pension Funds and Financial Innovation," NBER Working Papers 3101, National Bureau of Economic Research, Inc.
- Boyd, J.H. & Gertler, M., 1993.
"U.S. Commercial Banking: Trends, Cycles, and Policy,"
93-19, C.V. Starr Center for Applied Economics, New York University.
- John H. Boyd & Mark Gertler, 1993. "U.S. Commercial Banking: Trends, Cycles, and Policy," NBER Chapters, in: NBER Macroeconomics Annual 1993, Volume 8, pages 319-377 National Bureau of Economic Research, Inc.
- John H. Boyd & Mark Gertler, 1993. "U.S. Commercial Banking: Trends, Cycles, and Policy," NBER Working Papers 4404, National Bureau of Economic Research, Inc.
- Frederic S. Mishkin, 1990. "Financial Innovation and Current Trends in U.S. Financial Markets," NBER Working Papers 3323, National Bureau of Economic Research, Inc.
- Douglas W. Diamond, 1984. "Financial Intermediation and Delegated Monitoring," Review of Economic Studies, Oxford University Press, vol. 51(3), pages 393-414.
- Ross, Stephen A, 1989. " Institutional Markets, Financial Marketing, and Financial Innovation," Journal of Finance, American Finance Association, vol. 44(3), pages 541-556, July.
- Philip Lowe & Geoffrey Shuetrim, 1992. "The Evolution of Corporate Financial Structure: 1973–1990," RBA Research Discussion Papers rdp9216, Reserve Bank of Australia.
- Karen Mills & Steve Morling & Warren Tease, 1993. "Balance Sheet Restructuring and Investment," RBA Research Discussion Papers rdp9308, Reserve Bank of Australia.
- James, Christopher & Wier, Peggy, 1990. "Borrowing relationships, intermediation, and the cost of issuing public securities," Journal of Financial Economics, Elsevier, vol. 28(1-2), pages 149-171.
When requesting a correction, please mention this item's handle: RePEc:rba:rbardp:rdp9315. 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 references are entirely missing, you can add them using this form.