The association between banking reforms and performance of banks

An empirical investigation

Rahat Munir*

*Corresponding author for this work

Research output: Contribution to journalArticle

Abstract

Banking sector in Pakistan has undergone radical regulatory changes initiated in the early 1990s. These regulatory changes, inter alia, included enactment of regulations to improve private sector participation in the banking sector and to encourage efficient functioning of banks with less government interferences, removal of restrictions on interest rate and loans, and foreign exchange rate relaxation. This study attempts to review these banking sector reforms and examine its impact on the banks performance. The findings of the study suggest that there has been a persistent increase in profitability of banks with consistently decreasing nonperforming loans during the post-reform period (i.e. 2000), signifying that changes in the regulatory framework with ensuing competitive pressures on banks enabled banks to mobilize their resources more effectively and efficiently. The findings of this study provide important insights to the regulators, which would facilitate them to direct their policymaking and regulatory efforts. The importance of investigating the influence of banking reforms on banks performance in time of increasingly evolving banking regulations is a valuable contribution to the relatively limited banking literature, in general, and literature in the context of emerging economies, in particular.

Original languageEnglish
Pages (from-to)131-147
Number of pages17
JournalInternational Journal of Applied Business and Economic Research
Volume11
Issue number1
Publication statusPublished - 2013

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