Since the float of the Australian dollar in December 1983, the Reserve Bank of Australia (RBA) has retained the discretion to intervene in the foreign exchange markets in order to avoid what it perceives to be large overshooting in the currency. In this paper we invoke the ‘profit test’...

Conventional wisdom is that some capital flows are inherently more volatile than others. However, our investigation of the statistical properties of these flows shows that no regular relationships exist to suggest that the particular composition of capital flows can help to explain the overall...

This paper seeks to document key characteristics of small island states in the Pacific. It restricts itself to a limited number of indicators which are macro-orientated - population, fertility of land, ability to tap into economies of scale, income, and geographic isolation. It leaves aside...

The Australian credit default swap (CDS) market has been increasingly used by financial institutions to trade and manage credit risk. As a result, there has been greater use of the market as a source of credit risk pricing information. Similarities between CDS and bonds allow pricing in the two...

After falling for over a decade, the major banks' net interest margins appear to have stabilised in a relatively narrow range in recent years. In the early part of the financial crisis, margins fell to the bottom of this range, reflecting an increase in debt funding costs. Margins have since...

The global financial crisis has affected the cost and composition of Australian banks’ funding, with flow-on effects to their lending rates and net interest margins. Since mid 2007, Australian banks’ overall funding costs have risen significantly relative to the cash rate, mainly...

We examine whether liquidity dynamics within banking groups matter for the transmission of macroprudential policy. Using matched headquarter-branch data for identification, we find a lending channel of reserve requirements for municipal branches whose headquarters are more exposed to the policy...