Finance

Banking sector contributes 95% of the total financial sector in Pakistan economy and financial sector has a large share in overall growth of the country. For banking sector performance growth, State Bank of Pakistan has taken many significant steps. Banks involved in providing the financial needs of government and private businesses and neglecting the needs of small and medium enterprises, agriculture sector and consumer sector. Massive financial reforms as privatization, interest rate liberalization and banks restructuring and alike were introduced by Government of Pakistan in order to improve the performance of banking sector. The current study is designed to cater the need of financial reforms in banking sector, entailing the major financial reforms in banking sector by the Government of Pakistan and excogitate their impact on performance of banking sector in Pakistan. The outcome of the meta-analysis suggests that in this dynamic world of financial liberalization and global market integration the regulatory body must be vigilant and agile to cater the needs of every sector and introduce transformations on regular basis in order to create sound, healthy and competitive economy.

This paper reviews, appraises, and critiques theoretical and empirical research on the connections between the operation of the financial system and economic growth. It describes the role of financial system development in economic growth at the macro level, both theoretically and empirically. It also describes briefly the relationship of corporate finance and firm performance. It finally concludes the review and presents some policy implications in view of the reviewed literature. Furthermore, theory and evidence imply that better developed financial systems ease external financing constraints facing firms, which illuminates one mechanism through which financial development influences economic growth. The paper highlights many areas needing additional research.

This research paper empirically examines a correlation and causality between asset quality of commercial banks in India by using macro variables (linkages). The asset quality is measured in terms of rising non-performing assets (NPAs) of commercial banks. The correlation estimated between gross NPAs and the six macro variables has turned out to be significant. In addition to the study of the impact of macro linkages, sector- specific analysis is undertaken to examine the correlation between priority and non-priority sector lending and NPAs of these sectors. The Granger causality coefficients are also meaningful and significant. The paper also provides sector-specific correlation and causality analysis of gross NPAs of priority and non-priority sectors and credit to these sectors. The latter part of this paper illustrates Net Stable Funding Ratios (Base III) calculated for all scheduled commercial banks and suggests the ways to improve deteriorating quality of assets of scheduled commercial banks.

The purpose of this study is to investigate the relationship between government deficits and surpluses of budget volatility and money volume volatility with Tehran’s stock price index volatility. The data used in this study is the total price index of Tehran Stock Exchange and fiscal policies of governments and monetary policies of central bank, including deficits and surpluses of budget and money volume as a seasonal period (1996 - 2008). For describing long-term relationships between variables VAR model is used and for investigating this relationship the effect of macroeconomic variables namely interest rate, consumer price index, house price index on the Stock Exchange index are considered. Estimation results show that changes in stock price index have a positive relationship with the money volume and a positive relationship with government deficits and surpluses of budget.

While much research has been conducted in the United States on the use of loan loss provisions (LLPs) as a mechanism for managing earnings, managing capital, and as a tool for signaling future earnings strategies, there is a paucity of research in Europe. In this research, we replicate methodology used by Ahmed, Takeda and Thomas (1998) and examine the relative importance of key factors affecting the LLP decisions of Spanish depository institutions. Among others, we focus on the role of organizational structure. We speci?cally examine if and how LLPs are used prior to and after the implementation of capital adequacy regulations in the Spanish depository industry in 1992. Our results indicate that while LLPs were not used as a tool for managing capital after the new regulation came into effect, banks have now adopted a more aggressive earnings management strategy. This appears to be because the capital adequacy regulation of 1992 removed any capital constraint that hitherto acted as a disincentive to aggressive earnings management. Commercial banks appeared to adopt a more aggressive earnings management as well as capital management strategy than savings banks in the post regulatory era. Finally, we did not ?nd evidence that LLPs were used as a signaling tool by Spanish banks to portray their intentions about future earnings.

The relationship between stock market and various macroeconomic variables has always been divisive. Studies indicate that stock market is influenced by changes in macroeconomic variables. Some of which affect the stock market returns and index positively while others have an adverse impact on stock market returns and index. This article examines the impact of four macroeconomic variables i.e. GDP per capita, gross domestic savings, inflation and discount rate on KSE index of Pakistan. It covers a period of 20 years from 1991 to 2010. Statistical Package for Social Sciences (SPSS) is used to test the multiple regression model. Analysis results indicate that GDP per capital and gross domestic savings have a significant and positive impact on KSE Index. On the other hand, discount rate and inflation (being measured through CPI) posses a significant but negative impact on KSE Index. Explanatory variables under study accounted for 98% variation in KSE Index. Therefore, it is suggested that government should take remedial measures to control inflation. Also it should work on maintaining appropriate discount rate. There should be a balance between excessive high and low discount rate. It will boost investments in stock market and consequently stock returns and index.

Frequent and abrupt movements affect stock market movements adversely and results it in a highly volatile stock market. Hub of this study is to determine the relationship that exists between stock market volatility and macroeconomic variable concerning price level. Inflation rate, gold, oil and producer prices have been selected as macroeconomic variables concerning price level whereas volatility in KSE-100 Index served as dependent variable of the study. It is based on 144 monthly observations of the selected variables for a period of eleven years from 2002-2013. Multiple regression analysis is applied based on Ordinary Least Square. Findings revealed that statistically there exists a significant relationship between index volatility and selected macroeconomic variables. Movements in oil prices affect capital market movements positively whereas negative impact of inflation rate, gold and producer prices is revealed on index volatility. It is concluded that movements in these variables can help in predicting capital market volatility.

The objective of this paper is to relate the practices of microfinancing with the practices of Islamic financing. It discusses the main concepts and underlying assumption behind both thesystems. It further explains the different practices of Islamic financing. Also finds out the link between conventional microfinancing and Islamic financing practices i.e. how Islamfinancing can be merged with the conventional financing.

The study evaluates the performance and risk of monthly income plans of selected mutual funds with an objective to identify the top performing monthly income plan amongst the selected plans. The study has analyzed growth performance on the basis of returns of 6 months, 1 year, 3 years and since inception returns. Growth performance of the funds have been compared with industry average, and its benchmark index i.e., CRISIL MIP Blended Index. The Standard Deviations, Sharpe Ratio and Beta of the selected schemes have been compared to analyze volatility of the schemes and return per unit of risk. The study ends up with identifying top performing monthly income plans for relatively aggressive and conservative risk profile investors.

It is the primary responsibility of all parents to fulfill the child’s dreams and aspirations. With mounting inflation and hence a higher cost of living, parents have to ensure that their child is able to lead a life of respect and self-esteem with a financially secured future. Children’s plans offered by life insurers have emerged as a smart way to propose financial security to the children. The study examines the children’s plans offered by selected life insurers in India. It is found that plans floated by insurers are unique in providing financial means to children to pursue their goals, and these plans are the best available alternative to save and invest for the safe and bright future of the child. However, it is problematic for an individual to comprehend the trick of inherent and latent charges in these plans. The study observed that children’s plan SMART Steps Plus of Max New York Life and Young Star Plus II of HDFC SL are worth considering to save for child’s better future. On the basis of study it can be inferred that Young Star Plus II of HDFC SL is better in terms of inherent features and diverse charges as compared to SMART Steps Plus of Max New York Life.