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Article: Performance of banks.(Pakistan)
- Article from:
- Economic Review
- Article date:
- September 1, 2002
- Author:
CopyrightCOPYRIGHT 2002 Economic and Industrial Publications. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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The main factors responsible for stagnancy in deposit rates were increased administrative cost of financial institutions, overstaffing and increasing volume of non-performing loans and defaults. The increased cost of inefficiencies was passed on partly to the borrowers in the form of higher lending rates and partly to depositors as the rate of return on deposits was reduced. High lending rates increase the cost of borrowing thus, discouraging investment, while low deposit rates encourage consumption rather than saving. Low saving rates have their own macroeconomic consequences for the economy. Thus, the banking sector has to take measures to improve its efficiency and ...