Report of the Parliamentary Inquiry into Banking
2
Table of Contents
Executive Summary........................................................................................................4
1.
Introduction............................................................................................................6
2.
The Challenge: Has OCR Pass-Through Occurred?.............................................7
3.
The New Zealand Banking System: Context.........................................................8
3.1: Market Structure...................................................................................................8
3.2: The Reserve Bank.............................................................................................11
3.3: Information Disclosure.......................................................................................11
3.4: Government Support for the Banking System....................................................12
4.
The Official Cash Rate.........................................................................................13
4.1: The OCR and Interest Rates..............................................................................13
4.2: The OCR and Monetary Policy..........................................................................14
5.
Submissions: Key issues.....................................................................................15
5.1: General Interest rate margins............................................................................15
5.2: Interest Rate Differentials...................................................................................16
5.3: Bank Charges and Operational Policies............................................................16
5.4: Economic Outcomes and Impacts.....................................................................17
5.5: Competition........................................................................................................18
5.6: Other Concerns..................................................................................................18
6
Increased Interest Rate Spreads: Additional Information....................................18
6.1: Reserve Bank Data............................................................................................19
6.2: Data limitations...................................................................................................19
6.3: Interim Assessment............................................................................................20
6.4: Offsetting Cost Increases...................................................................................20
6.5: Bank Profitability Impacts...................................................................................22
7: Economic Impacts....................................................................................................22
7.1: Bias against the productive sector.....................................................................22
7.2: Massive rise in Overseas Debt..........................................................................24
8: Monetary Policy and the OCR..................................................................................25
9: Transitional and other constraints.............................................................................26
10: Findings of the Inquiry............................................................................................26
11: Draft Recommendations........................................................................................28
11.1:
Noting Recommendations.............................................................................28
11.2:
Operative Recommendations:......................................................................28
Annex I - Statistics........................................................................................................30
Annex II - The OCR and Monetary Policy Framework..................................................44
Description of Monetary Policy..................................................................................44
Summary and critique...............................................................................................46
Annex III - Peer Review - Professor John Quiggin.......................................................47
Global context...........................................................................................................47
Assessment...............................................................................................................48
Conclusion................................................................................................................49
Annex IV - Peer Review – Professor Tim Hazledine....................................................50
Evidence on widening of interest rate margins.........................................................50
Increased lending margins to offset bad debts.........................................................50
Possible policy changes............................................................................................52
Effectiveness of OCR-based monetary policy...........................................................52
Capital gains tax........................................................................................................53
Savings incentives....................................................................................................53
Leave a Comment