ECONOMICAL ANALYSIS

Economical Analysis

Economical Analysis

Australian Banking Industry and Global Financial Crisis

The Australian banking is a very highly competitive market. The ranking of 2009 shows that the market the Australian banks were at the 12th position in terms of the assets throughout the globe. The sector represents the 270% of the overall nominal Gross domestic Product of Australia which is better than the various other countries which are on the edge in the industry (www.austrade.gov.au).

The global crisis which has hit the overall industry in the year 20089-09 has made an Impact on the Australian industry as well. The effect was although on all the sectors, but the money market was affected in the most catastrophic manner. The banks were bankrupted and there were so many big names which completely eroded due to the bankruptcy in the global market (www.treasury.gov.au).

After so many years of that still the effect is felt and at the time of analysing any industry still the comparison is done between the pre and post recession period. In Australia the level of competition of the industry has although shown a prising trend which has been above the expected level. This has been done through focusing on diversifying needs of the recession stricken people. Products are introduced which are able to cater their needs and making the market much more lucrative (www.treasury.gov.au).

Price and Demand

Before coming to the example of the industry the price and demand relation is being explained. The demand of the product is the factor which tends the manufacturer or services provider to increase the productivity which is in form of output.

Price

Output

1

5

2

4

3

3

4

2

price

Output

4

2

3

3

2

4

1

5

The illustrations shown above are showing that the decrease in the price appreciate the purchase of the product and on the other hand the increasing price have a negative impact on the intention to purchase of the product or the service.

Coming back to the industry it is very easy to determine that collude, is going to make the demand of the products decreased and this will make a bad impact on the share of the major banks. The growth in the industry is a very good factor so far and this might affect negatively on the level of growth and the share might flee to the other lenders.

Efforts for Increasing competition by Governments

It can be presumed that the government is looking for an increase in the level of competition in the industry to make it sure that the industry is depending highly on a few major names. This is definitely not a feasible situation and this might affect the industry in long-run. If the other lenders are having a furthermore reduction in the level of share in the market, this may affect them really very badly and some of them might get bankrupt. This also might cause a sort of oligopoly or even a monopoly as a result of any sort of alliance between the market leaders.

Aggregate Supply And Demand Model

The aggregate supply and demand is plotted in the graph for ...