Banking Sector Analysis

TABLE OF CONTENTS

Acknowledgment | 2 |

Introduction | 3 |

Background Information | 5 |

Problem Development | 7 |

Objectives of the Study | 8 |

Problem Definition | 9 |

Managerial and Academic Value of the Research | 10 |

Literature Review | 11 |

Methodology | 18 |

Hypothesis | 18 |

Framework | 19 |

Related Definitions | 22 |

Results and interpretation | 24 |

Conclusion | 44 |

Recommendations | 46 |

References | 48 |

Appendix | 50 |

ACKNOWLEDGEMENT

I START BY THANKING ALL MIGHTY ALLAH FOR GIVING ME THE ABILITY TO COMPLETE THE TASKS I DECIDED TO UNDERTAKE.

I ALSO THANK MY PARENTS AND FRIENDS FOR HELPING ME THROUGHOUT AND GUIDING ME IN MY JOURNEY.

FINALLY I THANK MISS MADIHA SALIM FOR HER UNCEASING SUPPORT AND PERPETUAL GUIDANCE AND FOR EDUCATING ME EVERY STEP OF THE WAY.

Introduction

Banking is one of the most sensitive businesses all over the world. Banks play very important role in the economy of a country and Pakistan is no exemption of it. Pakistan has a well-developed banking system, which consists of a wide variety of institutions ranging from a central bank to commercial banks and to specialized agencies to cater for special requirements of specific sectors. The domestic banks in Pakistan are mainly involved in providing loans to corporate and consumer sector. In the past the banks also provide loans to the federal government to finance the fiscal deficit. In Pakistan the operations of domestic and foreign commercial banks remain the same. The reason is that the banking sector of Pakistan is very competitive, and this system is ranked among top ten in the world (State bank report of 2006). So in order to increase the market share banks are offering new financial services on a regular basis. The main sources of funding of these banks are from deposits which contributed 60% of growth in asset followed by equity and borrowings which have a share of 30% (SBP report of 2008).

One of the prime functions of the...