Financial Liberalization of Pakistan Essay example -- Economics Financ

In 1974 all banks of the unsophisticated were nationalized, with the objective of providing the ceiling for top priority projects or investments, and to ensure the depositors capital safety. Although this step was taken for the socio-economic benefits, however, the required results could non be obtained. And under the usual fields ownership and supervision the banking sector proved inefficient (Haque 1997), which leads the lower relieve and investment, so as a result economic growth lessen (khan and khan 2007). Besides other problems, the lower range of financial products and inaccessibility of consumer and mortgage financing also included in nationalization trunk (Haque 1997, Limmi 2002). So, to prevent from financial crises and for efficient working of financial markets, a unbendable and effective supervisory frame was necessary (Caprio and Klingebial 1997).So, after a ex of nationalization the need for some change in the financial system was felt. It was fore step for n ew remedys, and at the end of 1980s the reform program was initiated. However, the major reforms came in 1990s. In 1990 seven domestic and cardinal foreign banks were working in Pakistan, these seven banks have public sector ownership with a broad network of branches, and more than 90 part assets of banking sector (as shown in Table ). In that period there is not a single private bank, while seventeen foreign banks had moreover forty-five branches and less than 8 percent of total banking assets, their major equal was to deal international trade. (SBP)In 1990 there were three regulatory bodies i) give in Bank of Pakistan the major tasks performed by SBP are conducting the monetary policy, issue directives to mercantile banks regarding reserve requirement an... ...ing Companies law (1997) were repealed through promulgation of Banking Companies (Recovery of Loans and Advances, Credit and finance) Ordinance (1997). To increase the role of SBP as regulator government divides it into three organizations, i- SBP as central bank ii- SBP-banking services corporation (SBP- BSC) iii- National Institute of Banking and Finance (NIBAF).Works CitedCaprio, G, and Daniela K, (1999), Episodes of systematic and borderline financial distress, Manuscript, The World Bank.SBP (2004) Financial field Assessment, Research Department, State Bank of Pakistan. KarachiHaque, Ul N. (1997) Financial Market Reforms in Pakistan, The Pakistan Development Review Part-II, pp 839-854.Limi, A. (2002), Efficiency in the Pakistani Banking Industry experiential Evidence after the Structural Reforms in the Late 1990s unpublished