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本研究的目的是发展学生的笔记技巧，并清楚地了解利率对新西兰储蓄和投资市场的影响。本报告是在进行在线研究，由Rasheed Hussein先生进行演讲的准备，我的经济学导师在Aotearoa研究。
我们的第一个任务是进行在线或继发性研究在奥克兰市图书馆和选择的文章是非常重要的，对新西兰的利率，其作用和储蓄与投资市场之间的关系，然后总结文章和创建这个报告撰写相关笔记。
This report is task three(3) of the Academic Skills for Business Studies 469 collaborative assessed tutorial as requested by our tutor Miss Seema Singh on 12/12/14.
The purpose of this research is to develop students note taking skills and create a clear understanding of the impact of interest rates on the New Zealand savings and investment market. This report is prepared after conducting online research and a lecture conducted by Mr Rasheed Hussein, our economics tutor at Aotearoa Tertiary Institute on 13th November 2014 at 10.30 am- 12.30 pm.
Our 1st task was to conduct an online or a secondary research at the Auckland City libraries and choose articles that were important and related to the New Zealand’s interest rates and its role and the relationship between savings and investment markets, then summarise the articles and create notes relevant for this report writing.
Our second task was to apply the notes taking skills discussed in the ASB 469 class from the attended lecture by Mr Rasheed Hussein on the topic “The Impact of Interest rate on New Zealand savings and Investment Market”. The method of outlining was used to take notes from the lecture.
Interest rates play a major role in New Zealand’s savings and investment market. The role of Reserve Bank of New Zealand is to monitor and control the economy and accordingly outline the levels of interest rates that need to be put in place so that a balance could be maintained in the savings and spending market. Furthermore interest rate defines the level of people’s saving and the level of their spending as well. The high interest rates mean higher savings but a lower investment level, a lower interest rate means a higher investment and fewer saving.
Table of content
Executive Summary.................................................................................................1
Introduction ...........................................................................................................3
Findings .................................................................................................................3
The role of New Zealand Reserve Bank (NZRB) and Banks in New Zealand .............3
Interest rate ...........................................................................................................4
Economy .....................................................................................................4
Inflation ......................................................................................................4
International borrowings by New Zealand government ...............................5
Fiscal deficit of New Zealand’s Budget ........................................................5
Impact of interest rate on savings ..........................................................................6
Impact on Interest rates on investments ................................................................6
Conclusion .............................................................................................................6
References .............................................................................................................7
Introduction 简介
Savings is the money and the wealth that a household put in their banks deposit accounts for their future savings and in an effort to receive extra money that the bank pays on the deposited amount as interest rates. Investments are the same money that bank uses to facilitate their borrowers who need that money in a loan form to purchase something that they cannot afford to pay for. Thus, they pay have to pay extra money in the form of interest, on their borrowings to the bank.
Findings 调查结果
The findings from the in class lecture by Mr Rasheed Hussein on 13th November 2014 and the on-line secondary research conducted both revealed that interest rate has a very close relationship with both the savings and the investment. The rate of interest defines the savings level and the investment rate in the New Zealand economy. Therefore, it can be said that interest rates are the catalyst for the savings and the investment market in New Zealand. The rate of interest is the determinant for the level of savings and the level of investments in the market. If the interest rate is low then there is low level of savings by the households and if the interest rate is high then there is a high level of savings. But in case of investment rate in New Zealand, high interest rate determines high level of investment and low interest rate determines low level of investment.
The role of New Zealand Reserve Bank (NZRB) and Banks in New Zealand
Reserve Bank of New Zealand is an independent Bank operating in the New Zealand looking after all the banking corporation operating in New Zealand. It can be considered as the bank for the banks. They operate by taking Government’s submission and advice from the Finance Minister. It controls both the Interest rates and the Official Cash Rate (OCR) as It is responsible for the issuing of currency and destroying the outdated ones. They have knowledge of how much money is flowing in the New Zealand’s economy as the amount of money that comes into the country has to be declared and the amount of money that is going out of the country has to be also declared. It monitors New Zealand’s economy, employment rate, local and international investments in New Zealand. It also follows the events of overseas Major trading partners which have direct or indirect effect on the New Zealand economy for example, China, United States of America, India etc. A change in their economy will have an impact in the New Zealand’s economy as well as New Zealand’s trading sector is hindered by their its other trading partners where an decline in their trading abilities will result in their ability to trade with New Zealand. Hence there would be a decline in the New Zealand’s economy who depends on those trading with its major partners. Therefore reserve Bank of New Zealand main role in trade responsibility is to discuss, create and maintain New Zealand’s market entry for its locally produced goods and services to the other foreign countries. It develops a partnership arrangement in its trade talks by establishing open and an ongoing negotiations between New Zealand businesses and the foreign investors. This negotiation helps the New Zealand government and the concerned business to meet its defined demands and expectations of the local exporters. It also provides money to the Banks operating in New Zealand when they have issued lots of money to investors and are in short of funds (Hussein, R. 2014).
In 2008 Official Cash Rate was 2.5% when it was the lowest in the history of New Zealand but has increased to 6% in 2014 (Hussein, R. 2014).
Banks are the intermediaries between savings and the investments. Savers deposit spare money and wealth with the bank for save guarding and in return attain interest on it. And investors borrow money from the banks in order to invest or purchase something which they cannot afford to pay on their own therefore they seek bank’s help to finance them and in return pay interest rate on the loaned money plus the actual money borrowed. The banks give out loans to households and people and investments are made by entrepreneurs and business as well as foreign investors (Hussein, R., 2014).
Interest rate 利率
It is the cost of borrowing where the borrower has to pay extra money allocated to them depending on their loan and the rate of interest together with the actual amount borrowed. It is the rate set by the Reserve Bank of New Zealand which the banks operating in New Zealand have to pay to Reserve Bank and the borrowers pay to bank. The Banks operating in New Zealand also have to pay interest on savings banked with the banks by households and businesses. But the interest rate paid out on savings are at a lower rate than the borrowings that has to be paid to the bank. For example they have put up a 2% interest rate on savings and 6-7% on home loans, 22% on credit card accounts and car loans 13-14%.( Hussein, R. 2014) Reserve Bank has allocated different interest rates for different investments and loans as illustrated in the table below.
The interest rate on the different kinds of loans depends on the risk and the ability of it being recovered. As per above table the bank has put up a 13-14% interest rate on the car loans because it is a depreciable item and the value will depreciate over the years. Therefore if the borrower is not able to pay the car loan then the bank will recover the balance of payment by seizing the vehicle. As it’s a depreciable item, its value would be depreciated and the bank would not be able to recover the whole amount it had loaned out. Therefore high interest rate safeguards the loss that would be made on the car loan if the borrower is not able to pay off his/her debt to the bank. On the other hand it has placed a lower interest rate on home loans where they know that if the borrower is not able to pay off the debt, then the bank can recover the loaned out amount by selling the house and recovering for the loan and its cost (Hussein, R. 2014). |
