The Global Credit Crisis: Why Have Australian Banks Been So Remarkably Resilient?

Abstract

This paper identifies a number of key factors that explain the remarkable resilience of the Australian banking sector in the face of the Global Financial Crisis, with a view to gleaning lessons for other countries' banking systems. It is argued that in Australia a culture of prudent lending prevails: banks are soundly capitalised, with a well-diversified and stable funding base, and with a track record of healthy profitability. The industry is independently recognised for its sound corporate governance, and official oversight of banks is diligent. Importantly, the separation of commercial banking from social-assistance policy has been maintained, unlike in the US.