Financial Institutions Management Research Paper

Financial Institutions Management - Research Paper Example Berger et al (1995) provide that a bank’s market capital requirements as the capital ratio that increases the value of a bank in the absence of regulatory capital essentials. In the following parts of this paper, first depository institutions working in the Australia have been elaborated. It is followed by the ANZ De-composition analysis, highlighting the profit margin and other factors. Subsequent to that, it is followed by the calculation of the duration of ANZ’s assets and liabilities. Within that part, the evaluation has been added to define the impacts and representation of different terms. It is followed by the part yield curve mentioning the impact of a 10 basis point upward. Regulatory framework for depository institutions (500) There are two major depository institutions (DI) groups working in Australia. Banks and the non-bank depository institutions are authorized to deal with and provide related financial services. In Australia, the Australian Prudential Regu lation Authority (APRA) is the central body authorizing the financial institutions to conduct the financial intermediation. With the passage of time, the size of banks has substantially increased by volume and number of banks and bank branches. Particularly in 2005, the Commonwealth Bank of Australia remained the largest bank having total assets of $ 258.93 billion and held first rank till the end of 2005. Subsequent to that, National Australia Bank, Westpac and ANZ Banking Group were secured second, third and fourth positions respectively. Banks have the largest depository institutions as far as their size is concerned as they offer and provide a wide range of different products and services to the customers. The significant distinction between the banks and savings and credit unions, known as non-banking depository institutions, is that the banks do not have limited or particular types of assets or liabilities rather banks own a variety of assets and liabilities. For example, the ANZ possessed total assets $ 594,488 and $ 531,703 million in 2011 and 2010 respectively. Aggregately, the institutions aggregate growth in the total assets was recorded around 11.81 percent during that period; total liabilities remained $ 556,634 and 397548 million in 2011 and 2010 respectively along with the total growth was 11.85 percent during that period. In addition to that, further difference between these segments includes the differences in operating features along with different profitability across the size classes. Commercial loan portfolio, higher business venture funding, capital intensive support for the giant multi-national banks are some of the key operating features differences exist between the banks and other credit and savings depository institutions. During the period from 1985 to 2005, the aggregate number of banks operating inside Australia has gone up from 13 to 49. During that period, the growth driving factors include the presence of relaxation of entry re quirements and amendments in the regulatory framework and requirements of non-depository institutions. Over a period of time, the APRA has considerably revisited the regulatory policy pertaining to banking and other commercial-cum-financial activities in the country.