Reserve Bank of New Zealand Bulletin articles

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June 2002 (Vol 65, no 2)

June 2002 (Vol 65, no 2)

Download the complete issue of the June 2002 bulletin (PDF 542KB)

Articles

Editors Note (PDF 19KB)

The role of the Reserve Bank's macro model in the formation of interest rate projections (PDF 42KB)

By Tim Hampton
The Reserve Bank of New Zealand is relatively unique in that our macroeconomic projections include a variable nominal interest rate path over the projection period. This approach is different from the constant nominal interest rate assumption used by most other central banks. In New Zealand, the interest rate projection is produced using a combination of the Bank's core macroeconomic model and policy-maker judgement. The model increases projected short-term interest rates when inflation is projected to be persistently high relative to target, and lowers interest rates when inflation is projected to be persistently low relative to target. In this sense, model projections are referred to as endogenous interest rate projections. This article explains the rationale for endogenous interest rate projections and why the Reserve Bank has adopted this approach.

Corporate governance in the financial sector (PDF 58KB)

By Geof Mortlock
This article is an amended version of a paper prepared by the Reserve Bank of New Zealand for the Commonwealth Secretariat as a contribution to a technical assistance programme to strengthen corporate governance in the financial sectors of Commonwealth countries. It deals with the subject of corporate governance in the financial sector and the relationship between corporate governance and the management of banking risks. The article also summarises the Reserve Bank's approach to strengthening corporate governance in the New Zealand banking system.

Developments in the New Zealand banking industry (PDF 64 KB)

By Denys Bruce
This article reviews developments in the New Zealand banking system for the year ending December 2001. Financial information extracted from registered banks' disclosure statements highlights a banking industry that is performing well and in a sound financial position. Banks' revenue sources have been subject to pressures from competition and funding constraints in recent years, but they have been able to offset those negative revenue influences through asset expansion, efficiency gains, diversification strategies, and the use of sound credit risk management techniques, so as to enable overall profitability to be maintained and enhanced.

Developments in credit markets over two decades (PDF 60KB)

By Clive Thorp
Following financial market deregulation in the mid-eighties, the relative importance of sources of credit for the household, agriculture and business sectors changed markedly. This article examines the changing shape of the credit market for each sector since 1980, with a special focus on credit for agriculture. Changes in the relative size of these three main credit markets are traced from the time of deregulation, showing how fast credit to each sector has grown and the impact of their credit demands on the growth of private sector overseas debt to 2000.