Financial markets

Australia consistently ranks strongly in global comparisons of financial markets, and the country's high standard of corporate, financial and regulatory governance makes it a model in the world. 

The World Economic Forum's Financial Development Report 2011 ranked Australia fifth, out of 60 leading financial systems for the factors, policies and institutions that lead to effective financial intermediation and markets. 

The efficiency and disclosure of Australia's banks were seen as key strengths, as was the: 

  • low risk of a sovereign debt crisis
  • sophistication of Australia's financial markets, and the 
  • corporate governance and regulatory environment. 

Australia was also ranked first in the world for retail access to financial services.

Additionally, of the 144 countries surveyed by the World Economic Forum for the Global Competitiveness Report 2012-13, Australia's banks ranked fifth in the world for the soundness of their balance sheets. These rankings support Sydney's claim as a leading centre for global finance in the Asia Pacific.

The strength and sophistication of Australian banks have been major factors in the country's remarkable record of economic resilience over the past 20 years, and allowed the financial system to cope better with the global financial crisis than those of other advanced nations. 

In September 2012, as part of its Financial Sector Assessment Program (FSAP) update, the IMF re-affirmed its view that Australia's financial system is sound, resilient and well managed, with banks well placed to meet Basel III capital requirements. 

Australia's four largest banks remain in an elite group of the world's safest banks based on credit ratings, while Standard and Poor's Banking Industry Country Risk Assessment places Australia in a grouping of the second lowest-risk banking systems, behind only Canada and Switzerland.

Financial market rankings, 2011
Country1 Financial Development Index2
Rating3 Rank
Hong Kong SAR 5.16 1
United States 5.15 2
United Kingdom 5.00 3
Singapore 4.97 4
Australia 4.93 5
Japan 4.71 8
France 4.44 12
Germany 4.33 14
Malaysia 4.24 16
Korea 4.13 18
China 4.12 19
Thailand 3.32 35
India 3.29 36
Philippines 3.13 44
Indonesia 2.92 51

Footnotes:

  1. Rankings out of 60 countries. New Zealand and Taiwan not included in the survey.
  2. The Financial Development Index aims to measure the drivers of financial system development that support economic growth. These drivers are defined as the factors, policies and institutions that lead to effective financial intermediation and markets, as well as deep and broad access to capital and financial services.
  3. Ratings are derived from 7 component indexes which are equally weighted: institutional environment, business environment, financial stability, banking financial services, non-banking financial services, financial markets, and financial access. Ratings are on a scale of 1 to 7.

Source: The Financial Development Report, 2011, World Economic Forum