Abstract:
The present study aims at examining the privatization of banking sector in Pakistan, its
impact on efficiency, economy, employment and new products and services as well as on
legal environment. For this purpose economic model was used to judge efficiency of
banking sector for pre-and- post period of privatization.
The model shows that banking sector in Pakistan after privatization of few banks improved
its efficiency. Liquidity ratios of the banks have improved. Numbers and values of deposits
have increased. Profitability of the banks increased. Value of non-performing loans is
controlled. However, spread rate is still higher as compared to pre-privatization period. New
products and services have been created to facilitate the customers.
Impact on economy, in the sense of mobilization of savings, increase in loan advances and
credit, as well as investment have shown an upward trend. Quality of assets of all banks has
improved.
The study shows that the numbers of employees have decreased in banking sector but this
decrease is not alarming. The salary and remuneration to management / employees show
increase; meaning better return to services of employees.
For a new vision of the banking sector and to prevent financial mishaps in future, the State
Bank of Pakistan and Government of Pakistan are required to develop a new regulatory
system for privatized banks.
