Research aimed at assessing the state of the Australian finance sector — and its attitude and ability to respond to financial sector regulation — has been released, with concerns raised about whether these issues will have a permanent impact.
The Australian Centre for Financial Studies (ACFS), a consortium of five universities and Finsia, has released the first stage in a series of research papers addressing the ability of the finance sector to fund itself and respond to regulation in Australia and overseas.
ACFS executive director Professor Deborah Ralston said there was a need to identify whether market changes were transitory or permanent in order to understand how the sector will develop over the next decade.
As part of this examination ACFS — working with a group of industry stakeholders, Treasury and the Reserve Bank — has released three papers on the current state of the sector.
In one of the papers, "The Future Demand and Supply of Finance", the authors Professor Rod Maddock of Monash University and consultant Peter Munckton predict that superannuation will continue to grow but will change its investment focus.
"Superannuation funds will grow and probably continue to consolidate. It seems likely that retail and industry funds will manage more of their assets in-house. The growth of self-managed funds will continue to outpace the other entities, since richer and older individuals have revealed a strong preference to allocate their assets idiosyncratically," Maddock and Munckton said.
The two authors also stated that this would strengthen markets with more assets becoming securitised, while a market-based solution would be found for funding infrastructure. They also predicted the demand for derivative assets and forward protection would grow as investors become more sophisticated, but would be limited as the costs of these assets approached or exceeded the value being created by investing in them.
ACFS will address the issues raised in the three papers at a public forum in Sydney on 7 August.
