The Sectoral Demand for Bank Loans in Australia.

This paper presents a set of equations explaining the advances of Australian trading banks to various subgroups of customers. The seven subgroups examined are (i) agriculture, grazing and dairying; (ii) manufacturing; (iii) transport, storage and communication; (iv) finance; (v) commerce; (vi) building and construction; and (vii) persons. These equations are useful because they allow us to obtain a measure of the relative importance of the variables which have been suggested as the major determinants of the amount of advances outstanding. For example, the equations allow us to test the hypothesis that advances are sensitive to changes in interest rates. Moreover, these disaggregated advances equations provide an insight into the sectoral behaviour of the economy and have implications for the conduct of monetary policy. If these equations differ from subgroup to subgroup, the effect of changes in monetary policy will depend on the distribution of the initial impact of the changes over the subgroups. [ABSTRACT FROM AUTHOR]