Ian R. Harper

Mergers in Financial Services: Why the Rush?

The financial services industry worldwide is gripped by merger mania. More than 4000 mergers have taken place annually in the United States alone in the last few years. In many countries, including France, Italy, Germany, Japan, the United Kingdom and Canada, major mergers amongst the largest banks have either been announced or mooted subject to legislative approval. 1 Not only is the number of deals growing, so too is the average value of merger deals. The merger of CitiBank with Travelers’ Insurance and Salomon Smith Barney to form CitiGroup created the largest financial institution in history. In 1997, merger deals in the financial sector in the United States were worth more than

A decade of internationalization: the experience of an Australian retail bank

US500 billion. The merger of BankAmerica and Nation’s Bank alone was worth more than

Integration of Financial Services: Evidence from Australia

US60 billion. 2

Implementing monetary policy in a deregulated financial system: A study of the Australian official short-term money market

Abstract This paper examines the internationalization of the National Australia Bank (NAB), which began in the mid-1980s. Uniquely, in its international activities NAB concentrated on retail banking, something rarely seen outside ethnic banking. This paper discusses NABs motives and strategies in the context of its competitive environment and in conjunction with those that the literature on multinational banking identifies and that other multinational banks evince.

Does Risk Management Make Financial Markets Riskier

Abstract This paper examines convergence in the Australian financial services industry. It traces the emergence of financial conglomeration in Australia from its origins in the 1950s. The institutions involved, their market shares, and their mix of financial activities are described. The causes of financial conglomeration in Australia are discussed, noting that conglomeration has occurred in two main phases in Australia. The regulatory treatment of financial conglomerates in Australia is described, including recent changes to the Australian regulatory framework following the 1997 Financial System Inquiry. The paper concludes with some speculation as to the likely future of financial conglomeration in Australia.

E-Commerce and the Australian Economy

Abstract Deregulation of the Australian financial system in the 1980s necessitated a change of operating procedures for the implementation of monetary policy by the Australian central bank. This paper describes the new procedures, and attempts to model the process whereby changes in the official stance of monetary policy are translated into movements of the market-determined official or “cash” interest rate. The model is estimated using daily data on the flow of funds through the official short-term money market and receives qualified empirical support.

THE EFFECTS OF FINANCIAL MARKET DEREGULATION ON BANK RISK AND PROFITABILITY

Value-at-risk figures are calculated on the basis of historical market volatility and capital requirements are determined on the basis of these calculations. A rise in historical market volatility leads to an increase of the regulatory capital requirement. If market participants engage in forced selling to decrease risk exposure to meet imposed capital requirements, volatility may be amplified. Risk management on the individual firm level may thus actually lead to an increase of market volatility in the economy as a whole and the regulatory aim to limit the chances of systemic effects is undermined. We present an informal exposition of this argument as well as supporting empirical and anecdotal evidence.