Recent Trends in the Structure of the Financial System

Financial institutions in Australia fall broadly into two categories: intermediaries, comprising banks, building societies, finance companies and others which borrow and lend money (many also provide payment services), and insurers and funds managers, which pool risks and/or invest funds on behalf of others. The share of financial system assets controlled by intermediaries has fallen over the past 15 years or so, while the share of funds managers and insurers has risen (Table 1). Within the intermediaries group, banks have improved their position following deregulation, with non-bank financial intermediaries contracting through conversion or absorption into banks or exit from the system. Table 1: Financial System Assets (Per cent of system)