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Consolidation in Pakistani Banking Sector

Author

Listed:
  • Ziaul Haque Memon

    () (Shaheed Zulfikar Ali Bhutto Institute of Science and Technology (SZABIST))

  • Faisal A. Shaikh

    (Shaheed Zulfikar Ali Bhutto Institute of Science and Technology (SZABIST))

Abstract

Pakistan's banking sector has progressed rapidly in the last few years. The trend of consolidation in the industry, which began in the US and spread to Europe, Middle East, and South East Asia, has now reached the subcontinent. A process of consolidation as a viable solution has followed each crisis in the banking sector. In the aftermath of the crisis in South East Asia in 1997, when capital outflow plunged the banking sector, central banks of the states found consolidation as one of the crucial remedies. Since Pakistan was following the South East Asian model of financial liberalization, it also adopted consolidation under the supervision of the International Monetary Fund. After the collapse of Asian tigers, weak banks were asked to increase their paid up capital from PKR 500 million to PKR 1 billion. As a result, banks had to take the consolidation route. State Bank of Pakistan became powerful regulator after an amendment in 1997 Act.

Suggested Citation

  • Ziaul Haque Memon & Faisal A. Shaikh, 2003. "Consolidation in Pakistani Banking Sector," Journal of Independent Studies and Research (JISR), Shaheed Zulfikar Ali Bhutto Institute of Science and Technology (SZABIST), vol. 1(1), pages 17-22, January.
  • Handle: RePEc:zab:ancoec:v:4:y:2006:i:2:p:17-22
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    References listed on IDEAS

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    1. Leff, Nathaniel H, 1969. "Dependency Rates and Savings Rates," American Economic Review, American Economic Association, vol. 59(5), pages 886-896, December.
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    Keywords

    Consolidation; Pakistan; Pakistani Banking Sector;

    JEL classification:

    • A1 - General Economics and Teaching - - General Economics
    • A2 - General Economics and Teaching - - Economic Education and Teaching of Economics

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