Australia Yearbook - 2001

Chapter 26—Financial system 893
Financial markets
Financial markets are used by participants to
either raise funds (for example, by issuing
securities) or invest savings (by buying securities
and other financial assets). The major markets in
the Australian financial system include the share
market, bond market and money market.
Descriptions and tables indicating prices and
activity in various financial markets are provided
in this section.
A significant influence in financial markets is the
participation of institutional investors controlling
large pools of investment funds. These pools are
accumulated by collective investment institutions
and are often managed on a fee-for-service basis
by investment managers. A summary of the
activities of these institutions is also provided.
Credit market
Credit may be defined broadly as funds provided
to those seeking to borrow. However, analytically
useful measures of credit usually exclude
borrowings by financial enterprises because their
main role is as an intermediary, i.e. they borrow
in order to lend. Also, lending and borrowing
between enterprises which have a special
relationship, such as between companies in the
same group or between government agencies,
are often excluded from credit measures because
transactions between these bodies frequently are
of a non-market nature. Similarly, some types of
financial instrument, such as trade debts, are not
considered to be part of an organised market. All
of these types of transactions are omitted from
table 26.12, which presents a summary of the
demand for credit in Australia by the
non-financial sectors. It includes raisings by the
issue of both debt and equity securities.
Table 26.13 shows indicative interest rates for
bank borrowing and lending. Another view of
activity in the credit market is provided later in
this chapter under Lending by financial
institutions.
26.12 DEMAND FOR CREDIT(a)
1997–98
Net transactions during year
1998–99 1999–00
$m
$m
$m
Funds (including equity) raised on conventional credit markets by
Private non-financial corporations 54 763 50 795 58 998
National public non-financial corporations 12 259 354 18 312
State and local public non-financial corporations –1 250 –446 366
National general government –14 649 –8 973 –12 614
State and local general government –123 –3 149 –3 357
Households 41 759 42 763 59 239
Total 92 759 81 344 120 944
(a) Positive numbers indicate an increase in raisings. Negative numbers indicate repayment or redemption.
Source: Australian National Accounts: Financial Accounts (5232.0).
26.13 BANK RETAIL DEPOSIT AND LENDING RATES
June 1998
June 1999
June 2000
% p.a.
% p.a.
% p.a.
Bank deposit rates
Six month fixed deposit 4.15 3.70 4.80
Cash management accounts(a) 3.15 2.90 3.65
Bank lending rates
Housing loans—variable 6.70 6.50 7.80
Small business loans—variable 7.70 7.45 8.85
Credit cards 15.30 15.30 16.25
(a) Accounts from $20,000 to less than $100,000.
Source: Reserve Bank of Australia Bulletin.