Inside-Out: Perception of Key Finance Professionals about Theory and Practice of Islamic Banking

Islamic banking has shown tremendous growth in the first decade of 21st century. By the end of 2008, global volume of assets under Islamic banking reached US$951 billion. In Pakistan, Islamic banking has displayed a tremendous annual average growth of 76% during the last seven years and accounts for 6% of the market share (SBP-2010). However, keeping in view the religious ideologies of the significant majority of Pakistanis, Islamic banking industry has expanded at less than its expected potential. This study documents the perception of key players in finance industry about Islamic banking, to highlight the underlying issues directly responsible for slower-than-potential-expansion of this industry. Findings suggest, although theoretically, that the industry perceives Islamic banking correctly, however professionals do not feel content with its practice

Yes, we need a central bank

The financial system of a country comprises entities engaged in transactions involving financial instruments in money, capital, and foreign exchange markets. This sector has strong linkages with other sectors of the economy like external, fiscal and real sectors. The apex financial institution in every country is its Central Bank and the State Bank of Pakistan functions as our Central Bank. Section 9A. 1. of the State Bank of Pakistan Act 1956 shoulders the function of securing the soundness of the financial system explicitly upon the Central Board of Directors of the Bank. Traditionally, it has been considered ideal to place banking supervision under the umbrella of Central Bank because this function is key to the conduct of monetary policy and financial stability oversight. Financial sector reforms and restructuring process started in the early 1990s. Objectives of reforms were to create a level playing field for financial institutions and markets for instilling competition, strengthening their governance and supervision, and adopting a market-based indirect system of monetary, exchange and credit management for better allocation of financial resources. Reforms covered seven important areas: financial liberalisation, institutional strengthening, domestic debt management, monetary management, banking law, foreign exchange, and capital market.Central bank

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.

Monetary and fiscal policies coordination - Pakistan's experience

The paper explores how the monetary and fiscal policies have coordinated with each other in Pakistan. It argues that monetary and fiscal policies have been executed independently throughout the study period that is 1964-65 to 2008-09 and there have been very few instances of coordination between the two policies while addressing prevailing economic conditions. The paper does not find any difference between the behavior of monetary and fiscal policies before and after the establishment of Monetary and Fiscal Policies Coordination Board in 1994. Whatever instances of coordination were found were clustered in military regimes; which may be one of the reasons of macroeconomic stability in such regimes.Monetary Policy, Fiscal Policy,

The size of informal economy in Pakistan

This paper estimates the size of informal economy in Pakistan by using monetary approach with some modifications, electricity consumption approach and MIMIC model. Under monetary approach, we take care of the issue of the stationarity of variables and use autoregressive distributed lag (ARDL) model instead of simple OLS and add education as an additional factor affecting the size of informal economy along with some other technical improvements in the standard monetary models. The electricity consumption approach and MIMIC models are used for the first time in case of Pakistan. The results show that the informal economy in Pakistan has been about 30 percent of the total economy which declined considerably in 2000s. Currently, about 20 percent of the economic transactions are taking place in the informal sector.Informal Economy, ARDL, MIMIC

On the Statistics of Cognitive Radio Capacity in Shadowing and Fast Fading Environments (Journal Version)

In this paper we consider the capacity of the cognitive radio channel in different fading environments under a low interference regime. First we derive the probability that the low interference regime holds under shadow fading as well as Rayleigh and Rician fast fading conditions. We demonstrate that this is the dominant case, especially in practical cognitive radio deployment scenarios. The capacity of the cognitive radio channel depends critically on a power loss parameter, $\alpha$, which governs how much transmit power the cognitive radio dedicates to relaying the primary message. We derive a simple, accurate approximation to $\alpha$ in Rayleigh and Rician fading environments which gives considerable insight into system capacity. We also investigate the effects of system parameters and propagation environment on $\alpha$ and the cognitive radio capacity. In all cases, the use of the approximation is shown to be extremely accurate.Comment: Submitted to the IEEE Transactions on Wireless Commun. The conference version of this paper appears in Proc. IEEE CrownCom, 200

Separation trends : a functional analysis of changing dynamics in relationships.

Dept. of Sociology and Anthropology. Paper copy at Leddy Library: Theses & Major Papers - Basement, West Bldg. / Call Number: Thesis1977 .H265. Source: Masters Abstracts International, Volume: 40-07, page: . Thesis (M.A.)--University of Windsor (Canada), 1977