Economy

Feb 7, 2018

How regulators lost their way on banking competition

New work from the Productivity Commission confirms our regulatory model for banking leads to inefficiency and big bank dominance.

Glenn Dyer and Bernard Keane

Crikey business and media commentator / Politics editor

commonwealth

For some time the evidence has been growing that, while we've regulated reasonably effectively for stability in our financial sector, productivity and efficiency has come a poor second. This is both in terms of the capacity for big banks to use market share to generate super-profits at the expense of customers, and the efficiency with which we convert our vast pool of savings into new investment. 

Now the Productivity Commission has opened that issue right up with its draft report on Competition in the Australian Financial System. The gist of which is, in regulating for stability, we've regulated against competition and productive investment.

Free Trial

You've hit members-only content.

Sign up for a FREE 21-day trial to keep reading and get the best of Crikey straight to your inbox

By starting a free trial, you agree to accept Crikey’s terms and conditions

6 comments

Leave a comment

6 thoughts on “How regulators lost their way on banking competition

  1. Jay Lawson

    >a vast trillion-dollar pool of savings, is focused on buying houses (and shares) rather than investing in new businesses.

    Time for a state bank?

    1. CML

      Great idea…hope the ALP is listening???

      1. AR

        Remind us again who privatised the Commonwealth Bank.

        1. CML

          AR…sorry, but I think you will find that Keating sold 49% of CBA, leaving government with a 51% controlling interest.
          It was none other than our favourite rodent JWH, who sold the other 51%.
          That is my memory of events anyway.

  2. cp

    Why can’t they break them up anti-monopoly like? And separate some of them into restrictive operating segments, say city, regional, agricultural, industrial, infrastructure, research and so on.

  3. Itsarort

    Obviously the ‘four pillar’ concept required continuous tweeking and was never meant to be a one-stop-shop solution to lending and borrowing in this country. However, over the years, ‘tweeking’ has become more like lascivous ‘twerking’ for the ammusement of the old boys club, as they wallow in their extravagent havens of opulance and unfetted greed.

Share this article with a friend

Just fill out the fields below and we'll send your friend a link to this article along with a message from you.

Your details

Your friend's details

Sending...