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Linking Banks & Strong Economic Growth

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Lee Jia Yi

on 20 August 2014

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Transcript of Linking Banks & Strong Economic Growth

Graph 2: Tax paid (bn)
Graph 1: Economic contribution
Benefits translate to the banking industry
Increased Lending
Business - Increased profits & confidence look to expand
Household - Expand consumption & desire for credit

Asset quality
Unemployment rate - improve loan serviceability & decrease non-performing loans.
Asset price - add value to on-balance sheet assets and reduce loan-to-value ratios on outstanding loans.

Improve access to funding
Investment increases - increase in deposits - reduce banks cost of funding

Policy options for increasing productivity growth in the future
It will facilitate sustainable economic growth through
productivity in the future.
Policy options should be developed along three areas:

Banks have an interest in strong economic growth
Wide range of benefits:-

Linking Banks & Strong Economic Growth
Why it is ...

Important for the banking industry to consider the "
role of policy reforms"
Important to uplift these issues in the public domain
Michelle Lee Jia Yi 3905585
Michael 3902595
Sudhaasini 3928024
Thivashini Jayakumar 3916665
Interest towards strong economic growth
How will it be achieved?
Performance of Australia's productivity

Opportunities lies in the future
Published by Australian Bankers Association
Harper 2011
Harper 2011
Graph 3:
Non-performing housing loans
Economic growth has clear benefits for banks and the wider economy.

Economic growth can be achieved through a combination of using resources ‘extensively’ and ‘intensively’.

Should provide lessons for policy makers and regulators .

ABA can add a new perspective and ensure banks’, and society’s, long-term interests are actively presented to, and considered by, policy makers.

Why banking industry is important to Australian economy?
Harper 2011

- Helps pay off billions of dollars in tax and dividends
- Government tax revenue
- Returning wealth to shareholders

- Drivers of productivity
(large investments into IT; 14.3 billion past 5 years)

- Provider of employment
(November 2010, 3.4 billions invested)
(Makes up 2% of Australian labour force)
Source: Australian Bureau of Statistics 2013
Harper 2011
Financial & Insurance industry
2010 - '11
, Largest share to GDP (

Between 2000–01 and 2010–11
, the largest increase in industry GVA share of GDP was for Financial and insurance services (
up 2.6 percentage points
Contributed $135 billion
$1.2 trillion to economy; 11.1%
* $70.5 billion paid out in dividends; lustrum (5 years)
* $15.8 billion; 2010
* Sustainable pool of savings
Harper 2011
Increase in lending and asset quality with an increase in access to funding lead to an increase in bank’s profitability
Improvements in living standards

Rising employment

Increased capital investment

Greater business & investor confidence

Improved environmental outcomes

increase income
reduction poverty
income increase
business expands
hire additional workers
demand & output increases
government & business accelerate capital investment
positive effect on business profits
general economic conditions
opportunity to increase environmental efficiency & sustainability
Incentives – ensuring external pressures for organizations to perform (implementing competition reforms and the scheduled reduction of tariffs.)

Flexibility – providing the ability for organizations to respond to those pressures (be increased by continued industrial relations reforms and removing excessive regulation)

Capabilities – improving ‘support’ for productivity growth (supported by ensuring the required capacities exist, by improving education outcomes, investing in efficient infrastructure and promoting productivity improvement in government services)

How is strong economic growth achieved?
How has Australia's productivity performed and what opportunities exist for the future?
Q & A Session
Using Additional Available Resources
Increasing Goverment Expenditure
(Pettinger 2011)
Loosening Monetary Policy
(HSC n.d.)
Implementing Accomodating Legislation
Releasing more land for Devel0pment
Additional land to be mined
Using Available Resources
Increasing productivity
(Business Case Studies n.d.)
Adopting New technology
(Queensland Government 2014)
Can develop or hire Human capital and adapt organisational structure
Economic of Scale ( New Economy Coalition n.d.)
Investment in research and deveopment and enchancements to Human capital
(MariMuthu, Arokiasamy & Ismail 2009)

Australia's productivity has lagged behind that some other developed nations (Janda 2012)
Geographical Factors of Australia
(Australia Government n.d.)
Main Drivers of Australia's Productivity Performance in 1990s ( D’Arcy & Gustafsson 2012)
Monetary and Fiscal Policy ( Aspromourgos 2006)
labour Market (Thistleton 2010)
Industrial Relations and training (Lansbury 2000)
These reforms allowed for
resources to be more productively allocated
(Australia Government 2009)
Production to be more specialized within industries
increase in the use of up-to-date technologies and workforce skills
(Australian workforce and productivity agency 2012)

In the 2000s average growth rate in productivity starting to fell
Electricity , Gas and Water
Cause of drop in productivity (Green, Toner and Agarwal 2012)

Harper 2011
Harper 2011
Harper 2011
Harper 2011
Harper 2011
Harper 2011
Harper 2011
Harper 2011
Full transcript