Question

There are 2 short-answer questions in this paper. Type your answers where indicated. These short answers can be in bullet point form.

1. Do you think Australia’s big four banks are too big to fail? (5 marks; ）

Answer 1

While the domination of the banking sector is similar to the situation in the early-mid 1990s, the current dominance of the big four is much greater.According to the Australian Prudential Regulation Authority (APRA) there are 69 banks operating in Australia (admittedly not all take deposits or make home loans), but the big four now control 84.3% of all home loans undertaken by banks and 81% of all household deposits. Ten years ago they controlled less than 75 per cent of both categories.

"There's always been a concept: too big to close," but nothing iss too big to fail and so with the large banks, the four major banks in NZ are the four large Australian banks.If any one of those closed it would bring the rest down."