This research essay is done for the purpose to compare and contrast the financial system between two countries chosen which are Australia and Singapore. This research essay is mainly concentrate on different types of institutions in the financial system and the role they play. Moreover, the different types of institutions in different countries will then compare in order to analyze the similarity and differences.
There are three sections consists in this research essay. The first section stressed on the central bank in Australia, the Reserve Bank of Australia (RBA) and the central bank in Singapore, the Monetary Authority of Singapore (MAS). First of all, the history of central bank of each country was discussed in order to view how the central bank is set up in the country. Central bank in a country plays an important role to the whole financial systems. Thus, the functions and roles a central bank plays will be discussed. The major function the central bank performs is to act as bankers for the government and financial institutions. Besides, RBA and MAS also perform monetary policy, prudential regulations, debt management, liquidity management and financial stability management. The central banks intervene in these areas in order to perform the financial system well.
Financial institutions and the role they play were examined in the second sections. Financial institutions include banks and financial companies, trust companies, insurance, capital market intermediaries, financial advisers, insurance brokers and superannuation. The flow of funds in each financial institution is described where how the funds flow from surplus unit to deficit unit.
The last section that will be discussed in this research essay is regarding to the efficiencies of the financial system. The economic efficiencies includes allocative efficiency, productive efficiency and dynamic efficiency Financial system must retain efficiency as it can promote a sound of financial system as well as maintain a sustainable growth in the economy.
The year of 2008/9 has been a disruptive year in the global economy. The financial crisis started to show the effect in late 2007 and continuously deteriorated in 2008. The bankruptcy of Lehman Brothers in late 2008 has further contributed to the global financial crisis (Anup 2009). The tremendous impact of the crisis have cause global financial market to corrupt to a certain level. Around the world, small, unstable financial institutions collapsed as well as the big, stable financial institutions; stock markets have dropped very badly; unemployment peak up and companies have to retrench the employees in order to survive in this crucial situation; currency depreciated and all sort of problems in the financial market risen continuously (MAS Annual Report 2009). At this point of time, governments step in and influence the market via all kind of policies which suit their economy and financial situation. Central bank as the banker to government and the financial institutions in the financial market play an extremely important role in the whole process of facing this global crisis. Financial institution as well, starting to take different prevention approaches to safeguard their position in the financial world.
Responding to the weak global financial situation, Singapore and Australia faced the downswing in the economy growth in 2008 though both countries are financially stable in overall situation. The following report will be discussing the overall financial institution in Singapore and Australia; how they perform their parts and the differences in between; how they deal with the global financial crisis; how they deal with the efficiency issue in respectively.
The central bank of Singapore is known as the Monetary Authority of Singapore (MAS). Earlier in 1970, Singapore started to growth and there was increasing need of a better banking and financing...
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