Assessing the long-run impact of reforms and privatization on the banking industry of Pakistan

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    This study examines the long-term impact of privatization and broader reforms of the banking industry in Pakistan over a quarter of a century. We conclude that following the reforms and changes of ownership, as expected, banking firms made an adjustment to their input usage by switching from labour saving to labour using after the reforms, but vice versa for purchased funds. Simple descriptive statistics of the productivity estimates reveal that banking firms did not experience any improvement in productivity (medium-sized and private firms in particular). Operating nationwide has a clear advantage in terms of productivity growth compared, with operating only in urban centres with a limited number of branches. More importantly, when the productivity estimates are regressed on a number of explanatory variables to control for bank-specific factors and the economic, financial, industrial and political environment, we conclude that the reforms and changes of ownership have indeed made privatized banking firms in particular more productive.
    Original languageEnglish
    Pages (from-to)461-494
    Number of pages34
    Journal International Journal of Banking, Accounting and Finance
    Issue number4
    Early online date24 Apr 2020
    Publication statusPublished - 14 Oct 2020


    • total factor productivity
    • reforms
    • privatization
    • technological progress
    • input bias
    • banking industry
    • Pakistan
    • TFP


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