An essential prerequisite for the proper functioning of the Fund is the interaction with a stable and efficient banking system. The continuous growth of competition in the banking system and the advancement of this sector have led to a decline in cost in bank financing conditions, and improvement thereof. The average effective interest rate on loans in March 2019 was 6.7%.
The focus immediately after the war was on stability with little regard given to the efficiency of the financial system. This was consistent with extensive government intervention and regulations in other markets. As a result, in the early post-war period, the Australian banking system was highly constrained.