The growing power of Australia's biggest banks are the target of six influential economists who have petitioned the Prime Minister and the Treasurer to set up an inquiry into Australia's financial system — the first in more than a decade.

In an open letter, the economists express alarm at the erosion of competition in banking since the global financial crisis, with smaller independent lenders disappearing and banks boosting their share of the home mortgage market from 80 per cent to 92 per cent.

The economists also question whether Australia's comparatively strong financial performance amid the global crisis has been due to luck, rather than good regulation.

It is possible, they say, that a "good roll of the dice" has helped Australia avoid major failures such as those seen in Britain. "In future crises, we may not be so lucky.