Fins1612 Test1
Please read these instructions to the students before the commencement of the exam.
QUIZ 1
University of New South Wales
School of Banking and Finance
FINS 1612 Capital Markets and Institutions
Session 1 2007
Instructions:
Time allowed: 20 minutes
Total number of questions: 4
All questions are to be answered.
This quiz constitutes 15% of your grade.
Write your name and student number on the examination question paper.
The candidate is not allowed to use any examination aid.
The question paper may NOT be taken out of the examination room.
The exam will commence at 5 past the hour and conclude at 25 past the hour.
Name: Student ID
1. Explain how the importance of Banks in Australia has been affected by regulation.
• Until the early-1980s commercial banks operated in a protected but highly regulated market. • In order to avoid regulation other non-bank financial institutions emerged and grew strongly, attracting an increasing market share. • During this period the size of the banking sector diminished. • Government, through the central bank, found their influence on economic activity also diminished as their control of the overall financial system lessened. • Two choices—regulate all financial institutions or deregulate the banks. • Most developed countries, including Australia, have deregulated the commercial bank sector. • For example, in Australia in the 1980s, controls on interest rates and bank products were removed. The exchange rate was floated. Foreign banks were granted banking authorities. • In the new competitive environment the banking sector has grown strongly. • Commercial banks must still meet certain regulatory requirements, such as minimum capital requirements, which are set by the bank supervisor to
QUIZ 1
University of New South Wales
School of Banking and Finance
FINS 1612 Capital Markets and Institutions
Session 1 2007
Instructions:
Time allowed: 20 minutes
Total number of questions: 4
All questions are to be answered.
This quiz constitutes 15% of your grade.
Write your name and student number on the examination question paper.
The candidate is not allowed to use any examination aid.
The question paper may NOT be taken out of the examination room.
The exam will commence at 5 past the hour and conclude at 25 past the hour.
Name: Student ID
1. Explain how the importance of Banks in Australia has been affected by regulation.
• Until the early-1980s commercial banks operated in a protected but highly regulated market. • In order to avoid regulation other non-bank financial institutions emerged and grew strongly, attracting an increasing market share. • During this period the size of the banking sector diminished. • Government, through the central bank, found their influence on economic activity also diminished as their control of the overall financial system lessened. • Two choices—regulate all financial institutions or deregulate the banks. • Most developed countries, including Australia, have deregulated the commercial bank sector. • For example, in Australia in the 1980s, controls on interest rates and bank products were removed. The exchange rate was floated. Foreign banks were granted banking authorities. • In the new competitive environment the banking sector has grown strongly. • Commercial banks must still meet certain regulatory requirements, such as minimum capital requirements, which are set by the bank supervisor to