Question 1

Describe the changes that have taken place in the structure of the Australian financial system over the past 30 years (in terms of the relative size and importance of each category of financial institution).Why do you think some of these changes have occurred?(You do not need to quote specific percentages - just indicate which categories have increased or decreased in importance.)

Summarise the main recommendations of the Wallis Inquiry into Australia's financial system, and describe the changes that have taken place in Australia's regulatory system as a result of the inquiry.

Describe how an ADI determines the optimal mix of liabilities, and the strategies it can employ to attract both deposit and nondeposit funding.