An ‘Oligopoly’ is a market form in which a Business or Industry is directed by a minor quantity of sellers also know as (Oligopolists)(2). Oligopolies can result in numerous forms of collusion between any of the dominating markets, which may reduce the amount competition therefore it leads to higher prices for buyers. The banking system is liquid and highly regarded in the Australian Financial sector. Over the past 10 years the four major banks in Australia on numerous occasions how shown just how far they are willing to go in becoming the most successful bank.
In recent times, the very well know Commonwealth Bank is now the second largest Australian registered establishment on the Australian Securities Exchange (ASX) as of January 2008. Also noting that the COM Bank made a Market Capitalisation of AU79.86 billion at the end of the financial year (June 2011). (1)
Rank Company Market capitalisation
1 Commonwealth Bank A$79.86 billion
2 Westpac Banking Corporation A$65.62 billion
3 Australia and New Zealand Banking Group A$56.25 billion
4 National Australia Bank A$54.54 billion
Over...
WHAT WAS THE HIH BOARD DOING WHILE THIS SAGA WAS GOING ON? WHAT SHOULD THEY HAVE DONE?
A likely byproduct of a monopoly is feudalism, which could have arisen, given half the chance. It was the Bailey bank that always stood in the way of this happening.
This organization belongs to the oligopoly market structure. The oligopoly market structure involves a few sellers of a standardized or differentiated product, a homogenous oligopoly or a differentiated oligopoly (McConnell, 2004, p. 467). In an oligopolistic market each firm is affected by the decisions of the other firms in the industry in determining their price and output (McConnell, 2005, P.413). Another factor of an oligopolistic market is the conditions of entry. In an oligopoly, there are significant barriers to entry into the market. These barriers exist because in these industries, three or four firms may have sufficient sales to achieve economies of scale, making the smaller firms would not be able to survive against the larger companies that control the industry (McConnell, 2005, p.
Founded in 1937 as a housing based financial institution, St. George as Australia's foremost building society have now become Australia's fifth largest bank and one of the top 20 publicly listed companies in Australia. St. George has business spanning all the aspects of the financial industry including retail banking, institutional & business banking, and wealth management. The emphasis St. George has on its customers makes St. George stands out from other Australian banks. Customer service is St. George's priority in business culture, they are constantly investing and developing better relationship with its customers2.
An oligopoly is a market consisting of a few large interdependent firms who are usually always trying to second-guess each other's behaviour. There is a high degree of interdependence between each firm in the industry meaning individual firms must take into account the effects of their actions on their rivals, and the course of action that will follow as a result on behalf of the rival firm which will also have consequences. The market as we will see is also allocatively inefficient as price is above marginal cost. There are barriers to entry and exit in an oligopoly meaning that potential new firms will have huge costs if they try to enter the industry and sometimes firms collude in order to prevent new firms from becoming any threat. For example if a new firm tries to enter the industry the cartel can quite easily reduce its prices in the short run so as to remove the new firm. An example of a heavy barrier to entry for new firms is the cost of National or even International advertising. As a result of the firms being interdependent, there are various varieties of collusion in oligopolies to try and create some stable space for the firms to operate in. There are three kinds of collusion:
This research question is regarding to the case of ASIC v Healey (2011) 196 FCR 291. On October 2009, they were sued by The Australian Securities and Investments Commission (ASIC). There were many controversy regarding this matter as overly harsh and unduly harsh. Some considered this as a wake-up call for directors by Katz, Lipton, Rosen and Wachtell to take responsibility by fulfilling their duties so they will act with a degree of care and diligence. On the contrary, some considered it as overly harsh due to the requirement to the understanding of financial literacy. This essay will provide a summary of the ASIC v Healey case followed by the decision made by judges and why they made the decision then lastly followed by our opinion regarding
The early decades of the nineteenth century saw the establishment of banks in the Caribbean largely as a convenience for the local governments. Throughout much of the nineteenth century, most Caribbean banks operated as an oligopoly with limited government influence – this directly translated into higher profits. However, over time, the banking environment could best be described as complex and dynamic. Competition increased, resulting into greater need for improved customer service, product innovation and cost reduction strategies. In order to achieve this, the banking sector was undergoing major structural reforms characterized by mergers and acquisitions. On July 23, 2001 Barclays and CIBC announced that they were in advanced discussions which were intended to lead to the combination of their retail, corporate and offshore banking operations in the Caribbean.
Although firms in oligopolies have competitors, they do not face so much competition that they are price takers (as in perfect competition). Hence, they retain substantial control over the price they charge for their goods (characteristic of monopolies). In my discussion I will use the Australian airline industry to present how oligopolies operate, and to show the different behaviours and strategies that arise from the interdependence of firms. I will mainly concentrate on the domestic airline market in Australia. The domestic airline market consists of a duopoly of two firms, Qantas and Virgin Blue.
In the short run, oligopolies are. able to earn abnormal profits, but in the long run as well they are. able to sustain abnormal profits due to the barriers to entry and exit. Then the s The barriers act as a strong deterrent to firms that want to come in. the industry and " eat into" the abnormal profits and then exit the market.
Howells, Peter., Bain, Keith 2000, Financial Markets and Institutions, 3rd edn, Henry King Ltd., Great Britain.
The huge firms in an oligopoly have an role in determining the price of commodities and deciding the modes of production. On the other hand, the small firms survive with these giant firms in the same market by selling the products which the larger firms are not willing to sell.
An oligopolistic market has a small number of sellers dominating market share and therefore barriers to entry are high. These sellers are highly competitive and do not act independently of each other. Access to information is limited so sellers can only speculate of their competitor’s actions. Sellers will take advantage of competitor’s price changes in order to increase market share.
Westpac Institutional Bank May 2010, ‘Westpac Market Insights Australia, New Zealand, G3 & China’. Retrieved June 6th, 2010 from - http://www.westpac.com.au/about-westpac/media/reports/australian-economic-reports/
Studying Banking and Finance at University of St.Gallen will help me further increase my proficiency of corporate finance and financial markets. The in-depth research of specific topics, as well as a comprehensive curriculum, is a possibility for me to focus on my topic of interest ...
An organised and integrated banking system is the second feature of a developed money market. In fact, it is the pivot around which the whole money market revolves. It is the commercial banks which supply short-term loans, discount bills of exchange and act as a link between the borrowers, brokers, discount houses and acceptance houses and the central bank in the money market.