The Effects of Bank Regulatory Reforms on Banks’ Performance: A Case Study of Pakistan

Abstract

The foremost goal of this research study is to examine the role of the banking sector in the economy of Pakistan during the periods of post and pre-reforms. The research also seeks to analyze the performance and linkage of Pakistan’s commercial banks with the State Bank of Pakistan. The number of tests is applied to this, and trend line analysis is used for the results. From the empirical results, we concluded that the banking sector’s role in economic growth is higher in the post-reforms period than in the pre-reforms period. The average Gross domestic product (GDP) of Pakistan is higher in the post reforms period and poverty in Pakistan is reduced in such period also the unemployment rate is reduced down during this period rather than pre reforms period. The performance indicator of the Commercial Bank of Pakistan is reducing as a result of the rising trend in non-performing assets (NPAs). Our findings also reveal that the monetary policy of Pakistan is relatively low in 2000 because of inflation and a fall in interest rates, therefore, it is highly recommended that the State Bank take measures to increase or enhance the performance of commercialized banks and focus on the efficacy of the monetary policy to attain macro-level targets.