New RBNZ research point to persistent market failures
Despite the growing importance of the Māori economy, many Māori businesses still face structural barriers when trying to access capital—barriers the Reserve Bank of New Zealand (RBNZ) says are rooted in market failures.
In a newly released Bulletin article, Te Pūtea Matua points to persistent financial challenges that disproportionately affect Māori, from legislative restrictions around Māori land ownership to information gaps between banks and Māori clients. These issues contribute to limited access to credit and financing, particularly in rural areas where many Māori live.
According to RBNZ assistant governor Simone Robbers, such difficulties are not just individual or isolated, but often the result of broader imperfections in the financial system.
“These barriers contribute to ongoing financial exclusion which has broader economic consequences. It can weaken the financial system’s ability to allocate capital efficiently and limit the potential of the New Zealand economy, especially given the growing significance of the Māori economy,” Robbers said.
The Bulletin outlines how common market failures—particularly information asymmetries—make it harder for Māori to secure funding. These include a lack of financial data about Māori businesses, limited culturally appropriate banking services, and low mutual understanding between financial institutions and Māori clients.
Although various interventions have been introduced, such as financial education programmes, cultural training for banks, and tailored lending products, the RBNZ notes that uptake has so far been limited. Efforts have also been made to ease restrictions around using Māori land as collateral, but structural and legal complexities remain.
Signs of progress such as a narrowing of the financing gap between Māori and non-Māori are there, but the report concludes that more targeted policy action is required.
“Identifying where market failures exist is important for informing targeted and effective public policy interventions that support more inclusive and efficient financial outcomes,” said Paul Conway, RBNZ chief economist.
The report builds on the Reserve Bank’s 2022 Issues Paper on improving Māori access to capital and is part of its broader effort to examine long-standing inequities in the financial system. Future reforms, including changes to legislation and improvements in data and regulatory settings, are being considered to support a more inclusive financial environment.
