BFF2401 Commercial Banking and Finance Written Assignment (20%) Semester 2, 2017 Due date: Monday...

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BFF2401 Commercial Banking and Finance Written Assignment (20%) Semester 2, 2017 Due date: Monday September 18th , before 11AM (Week 9) This individual assessment task is designed to test a student’s achievement of objectives 1-6. The total mark is 30 marks (weight: 20% of total assessment). Word limit: 2,000 words (±10%), excluding references and appendices. ***** Topic: Banks’ liability management The 2008 global financial crisis was partly caused by banks’ failure in liability management (or funding management). a. Contrast between deposit and non-deposit liability sources by highlighting differences in their funding costs as well as other non-cost implications (for instance, risks, market factors, etc.). Your discussion should be supported by real-life examples. (Guide: 1000 words, 16 marks) b. Comment on the relative importance of different liability items on a specific Australian bank balance sheet. (Guide: 300 words, 6 marks) c. Download Orbis data for four (4) Australian commercial banks during XXXXXXXXXXwith regard to their liability mix and construct two (2) graphs that illustrate the trends in their liability mix over these years. Each graph is a line chart containing four (4) lines for the chosen banks. Based on these graphs, comment on differences between banks (peer analysis) as well as changes over time (trend analysis). (Guide: 500 words, 8 marks) Note: Approximately 200 words are recommended for introduction and conclusion together. Subheadings should be used to separate parts a, b and c. Suggested data source for part c: Orbis Bank Focus (access via Monash library database website, under the “Banking and Finance” tab). ***** 2 Instructions to students You are required to retain a copy of the assignment until results are finalised. You are required to write down the name of your tutor, date and time of tutorial on the assignment cover sheet. Any query by email must be sent from your Monash student email address @student.monash.edu. Any other email addresses will not be accepted. The file submitted electronically on Moodle must be named following the format: S217 – Your First name and Last name and Student ID – Tutorial day and time – Your tutor’s First name and Last name. For example: S217 – John Smith XXXXXXXXXX – MON 10AM – Michael Wang Faculty Style Guide Work submitted for this assessment must follow the ESSAY style as outlined in the Faculty Q Manual. Copies of this manual can be obtained at the bookshop or online at: http://www.buseco.monash.edu.au/qmanual/qmanual.pdf Submission date and time The due date of the assignment is Monday September 18th 2017 before 11AM (week 9). Assignments should be submitted both via Moodle (electronic copy) AND via the department assignment box at Building H, Level 3 (printed copy). Both submissions must be completed by 11AM on the due date. Note that the electronic submission link only permits ONE attempt. Applications for extension of time All applications for an extension of the time allocated to an assessment task must be made by completing the application form found at the following URL. The form must be submitted to the chief examiner for approval no later than 48 hours after the due date. http://www.monash.edu/__data/assets/pdf_file/0006/277152/in-semester.pdf Penalty for late lodgement An assessment is late if it is submitted after the due date, or after the extended due date if an extension has been granted. A penalty of 1% for the overall unit will be deducted for each working day (24 hours) the assignment is late after the due date (based on the 11AM cutoff). Assignments will NOT be accepted after 6 October XXXXXXXXXXLATE submission: Late assignments must be submitted via Moodle (electronic copy) and via the chief examiner’s mailbox (printed copy). The student should also notify the chief examiner of their late submission promptly via e-mail so that late penalties are properly recorded. Assessment coversheet Work submitted for assessment must be accompanied by a completed and signed assignment coversheet, available at URL: https://business.monash.edu/students/admin-information/application-forms Estimated return date Marked assignments will be returned to you during tutorials. If you do not attend the tutorial you may collect your assignment from the Chief Examiner during consultation times. Academic integrity In order to ensure the academic integrity of your submission and to deter others from copying your work, your submission may be processed by text matching software such as Turnitin. For additional information, the University's Student Academic Integrity Policy can be found at URL: http://www.policy.monash.edu/policy-bank/academic/education/conduct/student-academicintegrity-policy.html Criteria for marking Overall, the work submitted for assessment will be graded in accord with the table showing examples of grades and corresponding achievement levels published in the Q Manual (2012, p. 6). Should you have any queries or issues, please contact: Dr Tram Vu  XXXXXXXXXX XXXXXXXXXX

David · Accepted Answer

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Assignment Title 
Student Name 
Course Name 
Instructor Name 
Date
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Introduction 
There are two forms of liabilities held by the banks they are deposit and non-deposit 
liabilities. The main objective of the paper is to make an analysis about the deposit and non-
deposit liabilities of the banks and their differences. It will provide an in-sight about the liability 
mix used by the banks. In this paper, there is a detailed analysis about the liability mix used by 
the commercial banks of Australia to evaluate the trend in the liability management of the banks. 
The four commercial banks chosen for the analysis are Australia and New Zealand banking 
group limited, Bendigo and Adelaide Bank Limited, Commonwealth Bank of Australia and Bank 
of Queensland Limited.  
Deposit and Non-Deposit Liability Sources 
Both deposit and non-deposit are major sources of liability for the banks. In this section, 
there is a detailed discussion about the deposit and non-deposit form of liabilities for a bank 
(Blundell-Wignall, Atkinson and Roulet, 2014). Deposits are the amount that has been kept as 
the deposit by the people or the corporation or institution in the form of deposits. Following are 
the types of deposit liabilities (Turner and Nugent, 2015): 
 Current non-interest bearing deposits 
 Fixed deposits 
 Certificate of deposits 
 Current interest bearing deposits 
 Savings accounts etc.
Non-deposit liabilities for the banks are the borrowings made by the banks and they are 
as follows: 
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 Repurchase Agreements 
 Promissory notes 
 Bill acceptances 
 Liabilities due to financial institutions 
 Liabilities from clearing houses 
 Subordinate debts. 
 Mid-term and long-term debts 
The cost associated with the deposit liabilities is certainly lower when compared to the 
non-deposit liabilities. The long-term deposit rates offered by the banks are ranging between 2% 
and 2.75% that differs with the amount of deposit and their tenure (Commbank, n.d.). The 3-
month interbank borrowing rate is about 1.9% which is lesser than 2% for 3-month deposits 
(Trading Economics, n.d.). But the rate differs from one bank to another and with the credit 
rating of the banks. In general, the deposits carry lower interest rate liabilities when compared to 
the other especially the demand deposit and savings account.  
Deposit liabilities carry lower risk when compared to the non-deposit liabilities. The 
interest rate paid to the deposit is fixed and they are comparatively lower. The interest rates are 
influenced by the market interest rate but at the same time the banker set a lower rate so that their 
liabilities will be lower. The non-deposit liabilities of the bank carry more risk because they are 
highly tied up with the market interest rate. There are some cases where collateral is provided by 
the bank for raising the required debt. It creates more pressure and risks to the banks. 
It is challenging for the banks to attract more deposits as the scope and market are limited 
in this segment. On the other hand, the market for non-deposit liabilities is wider and provides 
better access to the debt. It is easy to obtain and they are more accessible when compared to the 
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deposit market. Non-deposit forms of liabilities are the funds borrowed by the banks from the 
Reserve bank of their respective banks in case of Australia it is Reserve bank of Australia. Banks 
make borrowings from different sources so that they will be in a position to run their business 
without any financial difficulties.  
Money market borrowings is a type of borrowing in which the bank has to repay the 
amount borrowed in short-term. Borrowing from other banks are highly prevalent in the banking 
industry and it another type of non-deposit liabilities. Bankers offer loan at lower costs to another 
bank when compared to the outsiders it is the main reason for the banks to borrow from the other 
banks for meeting their requirements. The deposits made by the people are subject to withdrawal 
as per the requirement of the people but they are low-cost loans. The cost of savings account is 
comparatively lower than other form of deposits.  
But the withdrawal risk associated with them is relatively higher. On the other hand, the 
liabilities obtained from other non-deposit sources does not carry any such withdrawal risks like 
deposit liabilities but the costs associated with them are higher. The risk of withdrawal is lower 
in non-deposit liabilities and risk of withdrawal is higher in deposit liabilities.

BFF2401 Commercial Banking and Finance Written Assignment (20%) Semester 2, 2017 Due date: Monday September 18th , before 11AM (Week 9) This individual assessment task is designed to test a student’s...

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