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

Colin Beardsley () and John R. O'Brien
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Colin Beardsley: ICMA Centre, University of Reading
John R. O'Brien: Tepper School of Business, Carnegle Mellon University, USA

ICMA Centre Discussion Papers in Finance from Henley Business School, University of Reading

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.

Keywords: Ris; Banks; Disclosure; Regulation; Entropy (search for similar items in EconPapers)
JEL-codes: C1 C7 D8 G2 M4 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2005-08
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