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The Financial Services Reform Act 2001: Impact on Systemic risk in Australia

Author

Listed:
  • Colin Beardsley

    (ICMA Centre, University of Reading)

  • John R. O'Brien

    (Tepper School of Business, Carnegle Mellon University, USA)

Abstract

The rise of conglomerate banks and their interrelated balance sheets, pose new challenges to theories of financial regulation. We measure the impact of recent legislative changes in Australia upon systemic risk, for banking and near banking sectors, and demonstrate a significant reduction post the legislation. This is consistent with a major legislative goal, to promote global competitiveness, because it implies a reduction in the cost of equity capital. In addition, we find no evidence in support of the HIH collapse increasing systemic risk in the overall financial sector but a relatively small effect was detected in the banking sector.

Suggested Citation

  • Colin Beardsley & John R. O'Brien, 2005. "The Financial Services Reform Act 2001: Impact on Systemic risk in Australia," ICMA Centre Discussion Papers in Finance icma-dp2005-12, Henley Business School, University of Reading.
    • Handle: RePEc:rdg:icmadp:icma-dp2005-12
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    File URL: http://www.icmacentre.ac.uk/pdf/discussion/DP2005-12.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Ris; Banks; Disclosure; Regulation; Entropy;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • G2 - Financial Economics - - Financial Institutions and Services
    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting

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