I found this an important chapter because the Martin Committee inquiry into the Australian financial systems endorsed the need for competition, as did the Campbell Committee ten years earlier, however, an efficient market is essential.
Campbell threshed out the advantages of co-regulation, which like ‘self-regulation supports competition, but with limited government involvement to ensure the desired prudential objectives are achieved effectively and equitably.’
The Campbell Committee advanced on the premise ‘the most efficient way to organise economic activity is through a competitive market system, which is subject to a minimum level of regulation and government intervention.'
It's view was ‘vigorous competition is essential for efficient operation of financial markets’ and potential conflicts of interest could be avoided by broadening membership of the self-regulating body, however, twelve bank CEO's demonstrated an efficient market is essential.
The Ray Committee expressed the same view with respect to these shortcomings, which have surfaced in the banking sector since 2003. The Rea Committee commented on self-regulation and the essential need for government’s role in the regulatory process.
This paper suggests regulation and competition do not compete if regulatory bodies are effective. The Australian banking sector, however, is testament to less than satisfactory Government oversight of regulators. FIND MORE...
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