A Study on Non-Performing Loans of the Pakistani Banking Industry during Different Political Regimes
AbstractAbstract Views: 64
Pakistan has been suffering political instability since its inception in 1947. A mix of military and democratic regimes has ruled the political system. The Pakistani government has been suffering many problems due to an unstable political structure since then. The banking sector is considered one of the key components of any economic system. In contrast, a high volume of NPLs prevailing in the banking industry may affect the profitability of this sector. This reach study tries to investigate the performance of the Pakistani-banking sector under the democratic regime and military regime, mainly from 1996 to 2017. This tenure has a combination of military and democratic governments. In this regard, the Mann-Whitney test compares the average NPLs for both regimes. This study has examined the banking sector’s loan performance under military and democratic regimes using NPL (gross) and NPL ratios. It is found that NPLs (gross) were low during military regimes while the democratic government has more NPL (gross), with an increasing trend over the years. The average growth in NPLs (gross) was observed as 8.1 per cent per annum during the tenure of the research study.
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