Restructuring of Financial Sector in Pakistan

The process of financial sector restructuring started in Pakistan during early 1990s. For this purpose, international financial institutions, like World Bank and ADB, provided technical and financial resources. The objective of this exercise was to let financial system play its role in economic growth and development of the country in an efficient and competitive way. A lot of policy decisions have been made and implemented during the last decade to reduce distortions and to develop competitive price mechanism in the financial markets. The process of restructuring is still going on and it is a bit earlier to say some final words about its success, however, we are able to say, on the basis of the trend the financial and other indicators are following, that we have been partially successful in achieving the set objectives. The competition among financial institutions has been intensified during the restructuring period. Some positive developments have also been witnessed on the front of money and foreign exchange markets. Though there are some improvements, yet there is a lot to do for strengthening of insurance sector, capital market and bond market. The whole exercise remained less effective in increasing financial deepening, and in reducing intermediation cost (i.e., interest rate spread). Until end of 1990s, policy of privatization of NCBs and drive for recovery of NPLs could not be pursued vigorously and NPLs continued to grow. During the last three years some considerable efforts have been made for privatization of NCBs. Only recently, the size of the NPLs has started to stabilize due to some intensified recovery efforts and better quality of new loans. The size of the NPLs is primarily responsible for the deteriorated health of financial institutions. The overall macroeconomic outcome is also against the expectations. Macroeconomic stability as well as proper sequencing of restructuring measures are necessary preconditions to the success of the whole exercise. In Pakistan, the financial restructuring process was introduced in an environment of large budget deficit and high and variable inflation i.e., in an atmosphere of macro-economic instability. Frequent changes in political set up of the country during 1990s also adversely affected this process. However, in the present milieu of political and economic management, it is expected that financial sector will be able to play its due role in economic growth and efficiency as the governance structure is improving, consistency in economic policies is being ensured, and political stability is envisaged.

PUBLIC DEBT MANAGEMENT

This paper examined the issue of managing public debt and analyses the present situation of public debt in Pakistan. When the government resorts to borrowing instead of introducing additional tax measures, to finance the budget deficit, it creates liability on itself known as public debt. Public debt accumulates over time if deficit in the budget presists for a long period of time. Growing public debt is a global phenomenon. Contemporary economic wisdom does not consider public debt a major problem per se; rather problem is the mismanagement and unsustainability of the debt. In Pakistan, due to improper use of debt, the debt management has become a much serious problem. Presitent mismanagement of debt made it unsustainable, which is threatening to cause further slowdown in the declining growth rate of the country. Off course, current exercises of debt restructuring could not help improve our debt to GDP ratio immediately: however, it has improved some short run debt burden indicators significantly. It is hoped that these reschedulings/restructuring will help us in increasing the investment and to promote growth. By improving our debt managemet process we can ensure it.

Corporate Governance for Banks in Pakistan: Recent Developments and Regional Comparisons

The emerging economies in the South Asian region have embarked on a bold reform process to develop the banking sector. This development has improved the transparency and accountability of the banking sector because these countries focused on ‘best practice’ corporate governance for banks. In view of a rapidly developing market with a slow pace of information dissemination, adverse selection and moral hazard problems are likely to be on the rise and may need a mechanism to train and discipline bank management. It was, therefore timely for the central banks in the region to introduce a ‘best practice’ for the banking system as a whole. This study provides a survey of recent developments in corporate governance of the banking sector in Pakistan and a comparison of similar developments in two other regional economies, namely, India and Bangladesh. In addition to a theoretical discussion on this issue, we also provide an overview of the banking sector restructuring and highlighting important features of the codes of corporate governance established by central banks in the sample countries. In conclusion, we present a comparison of the major differences in these measures across countries and comment on the pace of these developments.Corporate Governance, Banks, Pakistan

Financial Development and Textile Sector Competitiveness: A Case Study of Pakistan

Kletzer and Bardhan (1987) argue that countries with a relatively well-developed financial sector have a comparative advantage in industries that rely on external finance. Beck (2002), and Fanelli and Medhora (2002) find that well-developed financial sector translates into a comparative advantage in the production of manufactured goods. There has been no attempt so far to explore the relationship between the financial development and international trade competitiveness in the case of Pakistan. We construct Balassa’s Revealed Comparative Advantage (RCA) index for textile sector of Pakistan. Using ratio of credit extended to the textile sector to the total non-government credit of the banking system (TCS) as proxy for external finance we estimate long run relationship, and ECM, between RCA index and TCS while controlling for other determinants of the international trade competitiveness of textile sector of Pakistan. In line with the findings of Beck (2002), and Fanelli and Medhora (2002), our results suggest that recourse to external finance has a strong positive impact on the country’s textile sector competitiveness both in the short and the long run even when we control for traditional determinants of competitiveness.Financial Development, Competitiveness

Corporate Governance for Banks in Pakistan : Recent Developments and Regional Comparisons

The emerging economies in the South Asian region have embarked on a bold reform process to develop the banking sector. This development has improved the transparency and accountability of the banking sector because these countries focused on best practice corporate governance for banks. In view of a rapidly developing market with a slow pace of information dissemination, adverse selection and moral hazard problems are likely to be on the rise and may need a mechanism to train and discipline bank management. It was, therefore timely for the central banks in the region to introduce a best practice for the banking system as a whole. This study provides a survey of recent developments in corporate governance of the banking sector in Pakistan and a comparison of similar developments in two other regional economies, namely, India and Bangladesh. In addition to a theoretical discussion on this issue, we also provide an overview of the banking sector restructuring and highlighting important features of the codes of corporate governance established by central banks in the sample countries. In conclusion, we present a comparison of the major differences in these measures across countries and comment on the pace of these developments.Banking, Corporate governance, banking sector restructuring

Financial Development and Economic Growth: Evidence from a Heterogeneous Panel of High Income Countries

This paper examines the empirical relationship between financial development and economic growth for high income countries. The study focuses on both indirect finance and direct finance, separately as well as jointly. Applying the methodology of Nair-Reichert and Weinhold (2001) for causality analysis in heterogeneous panel data, two sets of results are reported. First, the evidence regarding the relationship between financial development and economic growth from a contemporaneous non-dynamic fixed effects panel estimation is mixed. Negative and statistically significant estimates of the coefficient of the inflation and financial development interaction variable indicate that financial sector development may even be harmful to economic growth when inflation is rising. Second, in contrast with the recent evidence of Beck and Levine (2003), heterogeneous panel causality analysis applied on a refined model indicates that there is no definite evidence that finance spurs economic growth or growth spurs finance. Most of our findings are in line with the Lucas (1988) view that the importance of financial matters is over-stressed. The only exception is the case of activity in stock markets where our result supports the Robinson (1952) view that finance follows enterprise.

A Simple Model for Magnetization Ratios in Doped Nanocrystals

Recent experiments on Mn-doped ZnS nanocrystals have shown unusual magnetization properties. We describe a nearest-neighbor Heisenberg exchange model for calculating the magnetization ratios of these antiferromagnetically doped crystals, in which the dopant atoms are distributed inhomogeneously within the nanocrystal. This simple inhomogeneous doping model is capable of reproducing the experimental results, and suggests that interior dopant atoms are localized within the crystal.Comment: 8 pages, 1 figure, 2 tables. Submitted to J. Appl. Phy

Designing a web-application to support home-based care of childhood CKD stages 3-5: Qualitative study of family and professional preferences

Background: There is a lack of online, evidence-based information and resources to support home-based care of childhood CKD stages 3-5. Methods. Qualitative interviews were undertaken with parents, patients and professionals to explore their views on content of the proposed online parent information and support (OPIS) web-application. Data were analysed using Framework Analysis, guided by the concept of Self-efficacy. Results: 32 parents, 26 patients and 12 professionals were interviewed. All groups wanted an application that explains, demonstrates, and enables parental clinical care-giving, with condition-specific, continously available, reliable, accessible material and a closed communication system to enable contact between families living with CKD. Professionals advocated a regularly updated application to empower parents to make informed health-care decisions. To address these requirements, key web-application components were defined as: (i) Clinical care-giving support (information on treatment regimens, video-learning tools, condition-specific cartoons/puzzles, and a question and answer area) and (ii) Psychosocial support for care-giving (social-networking, case studies, managing stress, and enhancing families' health-care experiences). Conclusions: Developing a web-application that meets parents' information and support needs will maximise its utility, thereby augmenting parents' self-efficacy for CKD caregiving, and optimising outcomes. Self-efficacy theory provides a schema for how parents' self-efficacy beliefs about management of their child's CKD could potentially be promoted by OPIS. © 2014 Swallow et al.; licensee BioMed Central Ltd