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INDUS INSTITUTE OF HIGHER EDUCATION KARACHI
FINANACIAL MANAGEMENT SYSTEM OF BANKING SECTOR (COMPARATIVE ANALYSIS)
A PROJECT SUBMITTED TO THE FACULTY OF MANAGEMENGT SCIENCES IN PARTIAL FULFILMENTOF REQUIRMENTS FOR DEGREE OF MASTER OF BUSINESS ADMINISTRATION (MBA FINANCE)
SUBMITTED BY KHURRAM KAMIL ID # INDUS-247-2009 JUNE, 2011 SUBMITTED TO: RANA TARIQ MEHMOOD FACULTY MEMBER EMAIL : firstname.lastname@example.org Faculty OF BUSINESS ADMINISTRATION
INDUS INSTITUTE OF HIGHER EDUCATION KARACHI
I am pleased to certify that Mr. KHURRAM KAMIL has satisfactorily carried out the research work, under my supervision on the topic of FINANACIAL MANAGEMENT SYSTEM OF BANKING SECTOR (COMPARATIVE ANALYSIS)”
I further certify that has distinctive original research and his thesis is worthy of presentation to the faculty of management science “INDUS INSTITUTE OF HIGHER EDUCATION” Karachi for the degree of MBA.
EXAMINER BUSINESS ADMISTRATION :
HOD BUSINESS ADMISTRATION :
Indus Institute for his guidance. appreciation. I tried very hard to make thesis meritorious.Acknowledgement ‘In the name of ALLAH. Lastly I am grateful to my family and friends for all their support and cooperation. people generally agree that man can approach excellence but never actually achieve it. Without his guidance this thesis would not have been possible. encouragement and valuable time throughout the period and for bearing with me. It would be privileged to say special thanks to all teachers who became part of my proposal and provided valuable information & support. Exquisite Perfection is rather trait of God. I would thank to all individuals who directly or indirectly were involved in the completion of this project & also our institute for giving us this opportunity which help us to improve our skills. Tariq Mehmood. However. I wish to express my grateful appreciation to my supervisor Sir. the most beneficial the ever merciful ’ All praise and thanks to ALLAH and prayers and peace be upon his Prophet Mohammed. and by His Grace. Perfection was watch word I had in my mind when I started working on this thesis. . Faculty of Finance.
II: LATEST RESEARCH ON FMS SECTION . 5 11 CHAPTER – 1 (INTRODUCTION) PURPOSE BEHIND SELECTING THE TOPIC OBJECTIVES OF RESEARCH SCOPE OF RESEARCH RESEARCH METHODOLOGY 13 14 14 16 CHAPTER – 2 (LITERATURE REVIEW) 17 SECTION .TABLE OF CONTENTS CHAPTER/ TOPIC ACKNOWLEDGEMENTS EXECUTIVE SUMMARY PAGE NO.I: LITERATURE REVIEW OF FMS SECTION .III: THEORETICAL FMS MODEL BASED ON INTERNATIONAL STANDARD CHAPTER – 3 (FINDINGS) EXISTING FMS IN THE BANKING INDUSTRY • • • MCB ABL UBL HBL 51 55 58 63 28 38 49 • CHAPTER – 4 (ANALYSIS) SECTION – I: ANALYSIS OF EXISTING FMS IN THE BANKING INDUSTRY 68 • • • • MCB ABL UBL HBL 69 70 73 75 77 80 80 SECTION – II: SUMMARY OF ANALYSIS OF THE BANKING INDUSTRY AS A WHOLE CHAPTER – 5 CONCLUSION .
RECOMMENDATIONS Proposed Framework of FMS Model Critique on the proposed model Improvements in the proposed model 82 83 86 89 Annexure: Annex “A”: Annex “B”: Swan’s Appraisal Form Appraisal Framework for Individual FMS 97 106 121 Annex “C to F”: Existing FINANCIAL Appraisal Forms of the Banks (04) Annex “G”: Appraisal Form of the proposed FMS model for the Banking Industry Bibliography: 142 151 .
particularly after their privatization. In supplement to the major localities of study. With the advent of more convoluted and dynamic transactions. to contrast it with the unanimously agreeable practices in this area. A foremost transformation has been seen in the economic markets. and replicable. most of the localized banks have revamped their methods and arrive up with better economic services to enhance the market share. These banks have undergone mammoth transformation throughout the past 15 years. Sound study is methodical. uncertainties have expanded in the market place. ordered (design helps action from inquiries to answers). in the era of 1980s and 1990s and. The four banks of the commerce under consideration are MCB. The sole reason of choosing only the premier localized banks is two bend – first to convey out a descriptive study of FINANCIAL Appraisal System common in the Pakistani localized banking commerce and second. An effort has been made to convey out a comprehensive study on the banking part and only four premier banks have been selected for the reason. UBL and HBL. Banking commerce is presently opposite a hyper turbulent position where banks have to function in progressively comparable and convoluted localized and international markets. ABL. of course. the tendency is producing marvelous advancements with each transient day. Keeping stride with the sophisticated foreign banks. effort has been made to succinctly feel upon the evolutionary method encompassing short annals of . The proficiency to contend in the very fast paced international natural environment is of paramount significance – survival of the fittest being the title of the game. with the assumption that that whole banking commerce is next alike FMS practices. prompting the localized banks to either change and be adaptive or stop to exist. facts and numbers founded (though this does not suggest quantitative).ABSTRACT Research is most often propelled by the require to find answers to problems. The affray has even become ever strong and demanding with the application of numerous foreign worldclass banks and other economic institutions. This is best finished in an orderly latest tendency with the aim on construction a powerful base to a theoretical structure upon which later work can be built.
each bank. Swan and Dick Grote. living FMS of all the four banks has been recounted in minutia. being utilized for the purpose. The study of living FMS of the banks depicts the grade of gravity with which the banking commerce is applying it. Literature Review wrappings internationally identified best FMS practices along with perfect forms of two renowned practitioners – William S. Due focus has been granted to the significance of FMS as an integral constituent of HRM. Finally. a theoretical form has been offered for later investigation as to how close is the form with the scheme being utilized in the Pakistani banks. as identified by nearly all premier association of the evolved countries in specific and evolving nations in general. In the outcome part. along with appraisal types. founded on the aforementioned investigation. a modified/ suggested form for FMS has been offered pursued by the Bibliography granted at the end. Here in this part. Having considered the best accessible forms. focus has been prepared to double-check that the best FMS of internationally renowned authors should be considered with specific quotation to its attachment with other constituents of the HR practices. .
Brief descriptions of how risk is treated in financial management theory. One area of major interest is the corporate governance debate on how the relationship between owners and controllers should be systemized to maximize the corporate gain. the environment to which the subject relates. Without a clear understanding of the fundamentals the remainder of this subject will not be easy to grasp. The unit 25 Principles of accounting. and how accounting is linked in with financial management. If that is true. then perhaps only a quick review of this subject matter is necessary. if studied carefully and fully. to be followed by a discussion of some of their conflicts of interest and how they might be resolved. An outline of corporate objectives follows because these form the basis of much of the theory that is covered in this subject.INTRODUCTION Purpose behind choosing the Topic: This chapter is clearly one of the most important in the subject guide because it deals with the fundamentals of financial management. are included and the chapter is concluded with a note of the direction and importance of taxation in today’s financial decisions. a knowledge of the background. Since knowledge of the financial environment is vital to managers this comes next before the review of the differing organizational forms of business that are in use. The roles of financial managers come next. is important as it helps to put everything learnt later into appropriate perspective. . but if the practice questions and problem(s) here and in the essential text cause you any problems. should have meant you already have all this background knowledge. then a more detailed and careful review of your pre-requisite unit may be needed . The chapter starts by looking at the key tasks of financial management. As with any subject area.
P. trading conditions much more risky and so returns to shareholders may be lower or non-existent. and having complete d the essential reading and activities. the appraisa l and selection. 2 and 3. • Essential reading Brealey. the theories presented . on its structure and on its objectives and operations . Different phases of the trade cycle have different implications for financial operations. R. Myers and A. and the control methods used. S. Allen Principles of Corporate Finance. Financial Management for Decision makers.C. (McGraw-Hill.. interest rates payable on loans will be higher.e. a stock market) in which the shares in a company can be traded. Further reading Brealey.J. Myers and F. Explain and give examples of how the influence of risk will permeate all aspects of financial management . In depressed times.C. List/outline the roles financial organization managers can have within an Outline such things as taxation. R.A. you should be able to: • • • • • Describe the general financial environment in which corporations operate. 2008) Chapter 1. Countries that are still developing may not have a public market place (i. (McGraw-Hill Inc. 2005) Chapters 1 and 2.Learning objectives By the end of this chapter .. accounting information and form of business and their implications for financial management. Financial environment The economic and social background of a country is a major influence on a firm. Give examples of the various objectives a company may have and why the main objective is deemed to be shareholder wealt h maximization. (FT Prentice Hall Europe. 2007) Chapters 1. In the capitalist economies of developed countries where there are stock . Explain the importance and roles of financial markets. Atrill. Marcus Fundamentals of Corporate Finance. the changes suggested. Firms in socialist or communis t countries have differen t structure s and objectives from those that operate in capitalist economies.A. S.
The extent of a country’s capital markets. very sophisticated. How and why those returns and share prices can be influenced will be covered later. For that. The quality and amount of that return. but this does not extend to managerial control of day to day operations. If the owner/partners want the entity to continue to grow then usually a change in form for the entity will be necessary. the dividend. The corporation or company is a legal entity of unlimited life. the owners of the shares in trading companies will expect returns on those shares. . Ownership and management risks are intertwined which makes raising very large sums of capital almost impossible. The liability being limited to the par or nominal value of the shares or equity held. very structured markets such as London and New York to some of the very small nascent markets in some developing countries in Africa and the Middle East. of which the stock market is but a part. They are managed by the owners and do not have a separate legal entity even though they may have a separate trading name. have limited liability for the debts and obligation of the company. in theory.markets. The unincorporated form of business make up the majority of the numbers of businesses. The liability of the owners of these entities is unlimited. Organizational forms of business Businesses established for profit-making purposes generally are organized into one of two forms: incorporated and un-incorporated. have to be appointed to act as the shareholders’ agents. ownership and management are likely to be separate. Potential owners of shares as well as existing owners of shares are interested in the quoted price of a company’s share and in the return obtainable from that investment. The owners of a company. though not the majority in terms of value or employment. management. but much of what is covered is also relevant to the unincorporated business. Each country has its own sets of laws and regulations which provide the parameters for the structure of the entity and how it can operate on a daily basis. its shareholders. In this subject guide we will be viewing financial manag ement from the perspective of a corporate entity. unless of course managers are also major shareholders. by way of directors. Therefore. vary enormously from the very large. The incorporated firm are the companies or corporations. while the un-incorporated are either proprietorships or partnerships. These businesses are generally sole proprietorships or partnerships. With ownership usually comes some form of control through voting rights. will be one of the elements influencing the price at which the share is quoted in the market. independent of its owners.
customers want the company to provide the product with the highest quality and lowest price. a company has many stakeholders. probably the directors. Agency theory attempts to explain this situation and how conflicts between principal and agent can arise. Corporate objectives are determined by a relatively small group of senior managemen t.Corporate objectives Generally we assume that a company’s objective is to increase the value of the shareholders’ investment in the firm. In practice. government. customers. Shareholder wealth maximization is the normative objective of a company that underlies financial management theory. These can be influenced by a number of things with an outcome which may not be shareholder wealth maximization. Systems should be used to monitor and ensure control of agents. It is argued that agents will tend to pursue their own goals and the greater the deviation of those goals from the corporate goals. for example use of annual reports. lenders as well as shareholders. Some of these individual objectives may be at slight variance with the others. for example. and which can be allowed to vary with circumstan ces and over time. creditors. the greater the agency costs. the setting up of an appropriate governance structure which restricts.g. who abuse their powers and who are therefore not attempting to ensure the company achieves its goals. share option schemes). As groups they have their objectives for the company and as individuals they have their own objectives for their stake in the company. as well as possible ways in which the costs of any such conflict can be minimised. We also assume that all managers act to further that objective. Therefore incentives should be provided to try to ensure convergence of goals between principal and agent (e. and in particular directors. Corporate governance . employees. It is often argued in the UK financial press that though companies may be trying to increase shareholder wealth it is not with a long-term perspective but is only short-term oriented. minimizes and hopefully enables the removal of management. Conflicts of interest and their resolution One of the major disadvantages of the corporate form is the separation of management and ownership. This separation can create costs which have been called the costs of agency since management is deemed to be the agent of the owners (the principals). but this may not result in high profits and share price maximization.
If there is only one single possible outcome. there is no risk. by six key reports starting with the Cadbury report in 1992. risk must be a major factor in all aspects of financial management. then there is a lot of risk. Financial management and risk Since financial management is concerned with making decisions. Risk may be defined as the extent to which what we estimate will happen in the future may or may not happen. .The essence of the corporate governance debate is the effects of the particular relationship between directors and shareholders. an investment in government securities). At present in the UK there is a voluntary system of governance in place. If there are many possible outcomes and many of them are very different from our estimate of the outcome. The framework has evolved through. the greater the potential for abuse and also the greater the possibility of suboptimal behaviour by managers as viewed by shareholders. or been impacted upon. Broadly speaking. both theory and practice show us that risk and return are correlated. we are prepared to accept relatively small returns. We seek higher expected returns for investing in riskier projects. and decision making is concerned with the future and the future is uncertain.g. The various recommendations of these reports have been incorporated into the combined code which is included in the Listing Rules of the London Stock Exchange as an appendix. Where we perceive little risk (e. The greater the separation between the two.
Objectives of the Research: The objectives of the carrying out study on the crucial HR constituent are multifold. • To study the living FMS in the banking part. farther propose improvements in the suggested framework. . • To find the power and flaws of both the suggested scheme and the one being performed in household environment. particularly in four premier banks – Muslim Commercial Bank. salient ones are appended below: • To study the theoretical architecture of FMS of the worldwide renowned authors and then founded on that evolve a structure that can be made applicable in Pakistani banking industry. • To suggest a FMS form founded on worldwide schemes and then to convey out a relative investigation of this suggested form with the FMS living in the banking industry. United Bank Ltd and Habib Bank Ltd. Allied Bank Limited. • In lightweight of the outcome of the relative investigation.
For this reason four premier localized banks that have been privatized in the past 15 years i. especially in the last two decades and it is tough to cover all aspects. supervising and evaluation of the presentation administration in premier worldwide associations and then to contrast these practices with the FMS being actually utilized in the Pakistani household banking industry.Scope of Study: The Financial management system has considerably amplified over the time span of time. However. Recommended forms of world-renowned practitioners have been revised to get a equitable concept about the exact advantages adhered to diverse constituents of this tool. The scope of the study is to study the designing. ABL. 15 . a dedicated effort has been made to study the diverse phases of FMS that have been endeavored in the past by the premier associations and verified highly successful. UBL and HBL have been chosen. MCB.e.
Taking into account that shareholders are residual claimants is yet another argument to accept long term shareholder value creation as the main corporate objective (Ross. only those investments that benefit the firms' shareholders financially should be undertaken (Friedman 1970. social welfare is maximized when each firm in an economy maximizes its total market value. stakeholder theory implies that managers must satisfy the competing demands of all stakeholders (Cornell and Shapiro 1987).LITERATURE REVIEW LITERATURE REVIEW OF FINANCIAL MANAGEMENT SYSTEM (FMS) Literature: The basic theory behind corporate finance economics argues that the maximization of shareholder value is the most important goal of the corporation. Corporations create value as long as the value of the inputs is less then the value of the output. Consistent with the basics of corporate finance. According to this theory. Opposed to shareholder value maximization. shareholders value creation will be optimal (Koller et al. Stakeholder theory suggests that companies should 16 . companies should try to minimize the costs of the supplies needed for their business and maximize the price of their products and/or services. 2001). This reasoning is in line with economic theory which implies that in the absence of externalities and monopoly (and when all goods are priced). Malkiel and Quandt 1971). If managers would pursue such a strategy. 2005).
2000). An enlightened vision on shareholder and stakeholder theory specifies longterm value maximization as the firm’s main objective and therefore solves the problems that arise from the multiple objectives that corporations face (Jensen 2001). More and more investors demand that companies define their carbon exposure and the risks they face due to associated regulations. 1985). the absence of externalities and monopolies. Managers must accept long run firm value maximization as the criterion for making the necessary tradeoffs among its stakeholders. The importance of a stakeholder to the firm's overall strategy should be the crucial factor for management's response to the needs of a particular group. 17 . The increasing costs for emitting carbon are meant to be stimulation for environmentally friendly business processes. two fundamental assumptions are made in order to obtain value creation as the single objective for the corporation. but they must consider the long run implications. However. and also its beneficial activities for the environment (Schaltegger et al. In this respect corporations can pursue an active environmentally friendly strategy.pursue not only the interest of shareholders but of everyone affected and involved in the company’s business. employees and political or social groups (Wartick et al. No firm can maximize value if it ignores the interest of its stakeholders. Theoretically these assumptions can exist but in reality they can not. Shareholders will have to deal with this reality. An ‘environmentally friendly’ company that is not economically successful will sooner or later disappear from the market. For example suppliers.
Without universal standards for carbon emissions policymakers at all levels are coming up with their own regulations. and equilibrium analysis to analyze financial structure issues at the firm level. expected return from farm operations. By incorporating the notion of risk balancing. they modify Collins’s model to obtain the optimal leverage ratio for agricultural producers. the optimal leverage ratio will increase. 2010). The role of business in the climate change issue is addressed in different ways worldwide. as business risk decreases. They also furthered his modeling by analyzing the effect of farm policies on the probability of equity loss using a cumulative density function of the rate of return on equity. Barry and Robison (1987) use a similar framework to review and incorporate the concepts of portfolio theory. Collins (1985) sets up a structural model to represent the leverage decision of agricultural producers. Featherstone et al. Collins’ contribution is the development of a Return on Equity (ROE) model that looks at optimal leverage decisions from the producer’s perspective. risk balancing. and interest cost of debt in his modeling. they demonstrate situations in 18 . His article examines the effectiveness of agricultural programs that are designed to reduce farm risk by reducing business risk. capital gains on land. He includes business risk. In this sense businesses are affected different worldwide. and a change in investor’s attitude toward risk. (1988) also examined the issue of the government’s farm policies. In his article.These regulations come with uncertainty. In their study. His results show that. Collins’ modeling of business and financial risk will serve as part of the core framework for this study. From there. Barry and Robison advance Collins’ work by appraising the possible changes in interest rates. return on assets. Collins finds that the government’s goal of reducing risk through government programs will be ineffective. There seems to be increasing consensus among shareholders that the way in which a company manages its carbon exposure can create or destroy shareholder value (CDP Report.
in order to cope up with these problems. amalgamation and acquirement process under the ownership of international banks (foreign banks) in Brazil. In their article. they include interest rate as a second stochastic variable in the model. and the average interest rate had a negative effect on the optimal solvency position. et al. Nakane I.which the farm policies can have a positive or negative effect on a producers’ likelihood of receiving positive returns to their equity. The review article disclosed that banking productivity is lesser in case of presence of government state owned banks as compare to privatized and foreign banks. From here. These results are a base for hypothesis of this study. Also. many government banks in Brazil transformed and get privatized through restructuring of government banking institution. They also differentiated the optimal solvency equation with respect to mean return on assets and interest rates. In their modeling. The past researches evaluates that how to measure the impact of these changes on productivity level of banks. (2004) reported that Banks productivity is affected over the last decade in Brazil severely. Parcel. They found that an increase in the variance of interest rates.M. Their conclusion is that policies intended to make farming less risky may have actually contributed to the financial fragility of agriculture in the early 1980s. they derive the optimal solvency function and analyze the effects of changes in business risk and interest rate risk on the optimal solvency of the cooperative. their model did not consider unique risks faced by each cooperative. However. 19 . the variance of return on assets. (1990) further Collins’ work to examine agricultural cooperatives. their study focused on traditional cooperatives and did not account for unique tax impacts and differing allocation options of NGCs. Their model will be modified to include these characteristics to determine the appropriate allocation strategies for NGCs. This study will examine multiple NGCs individually to account for their unique risks.
selection and dynamic on total factor productivity of banks. Static variables are dummies for 20 . The review of research article discloses that Brazilian states kept some control over the banks after restructuring. even 14 governments are actively operating in Brazil. get closed down. and liquidation of banks due to bad Financial. Total factor productivity of Brazil banks is changed due to many types of variables related to changes in corporate control. and few of them are liquidated due to poor Financial. and those government banks that are lacking in productivity. and some of banks get straight privatized. globalization trends of capital markets. and improving financial resources through privatization of government owned banks. it evaluates the impact of government state owned banks due to privatization. where as privatization shows the significant results in enhancing the productivity of Brazil banking institution.e.There were included few macroeconomic factors that is considered base for such rapid transformations in Brazil banking industry i. and for that purpose they have used the methodology which is suggested by one of renowned past researcher to evaluate the productivity of banks. According to past literature. Whereas total productivity of Brazilians banking institution are measured through estimate of production function. As a result. although they should try to control such corporate changes. acquisition of foreign banks. some of them first transferred from state to federal government and then privatized. Whereas the change in the ownership of government banks have been taken place in Brazil through privatization along with the effect of corporate change as in the shape of merger and acquisition of domestic banks. technological revolution. 14 out of 32 government banks in Brazil get privatized during the period of 1994 to 2002. These articles include variables to control the effect of static.
to estimate the parameter of production function.e.e. the Brazilian banking industry suffers problem of inflationary control.. Whereas the methodology is followed by the approach of Olley and Pakes (1996) i.e. dynamic variables are having two forms i. in order to cope with these problems. Whereas simultaneity selection refers to correlation relationship exist between the unobservable productivity variable and amount of inputs chosen by the bank. In 1990s. Although.group of banks which don’t get affect due to corporate change throughout the sample period. Even the some of dummies variable are for those banks that have included changed due to either liquidation or get exit of such banks from the banking industry. sample selection and simultaneity bias. although it has two available sources of bias i. The sample selection bias referred to many banks that left the market during the sample period where as it causes sample selection problem due to correlation relationship exist between the unobservable productivity and the decision to leave the market. change occurred in the form of joining and acquisition of domestic and international 21 banking institution. one dummies for those banks that have impact of corporate change to only one over the sample period. The second form of dynamic variable is one dummy for those banks that track the time period for such change. whereas selection variables are dummies for those groups of banks which have impact of change in corporate control only to one over the whole sample period. The variation in productivity is referred to as variation in output rather than variation in input which include variation in efficiency and technology. privatization of . Therefore the privatization of state owned banks are considered more valuable for total productivity of banks instead of reformation of state owned banking institution. This reviewed article is based on to evaluate the bank productivity in the banking industry.
Even it could be referred as in improving the banking Financial of other developing countries. & closed down the banks whose Financial is inefficient or say that affect the level of productivity of banks in long term. and how the improved banking supervision transformed the banking sector of Serbia for their present and future potential customer.government banking institution. In early 2000. actually it was such transition period in which Serbia banking industry are lag behind even the Financial of advanced transition economies and they are facing from multiple conflict issues during the prior transition and post transition period. The review article revealed that these ongoing reforms affects that how prior Financial of Serbia banking are different from the Financial of post-reforms. Bitzenis A. Serbia banking industry is facing from severe decline in the form of mismanagement. The review article disclosed that two 22 . Whereas reviewed article indicates some of control variables that affect the level of productivity and proved that the state owned government banks seem poor in productivity than privatized and foreign banks. and complex problems during the period of 1980s to 2000s. the Serbian government officials decided goal to bring Serbian banking industry on the right track through developing efficient policies for implementing these ongoing reforms. Reforms in banking industry have been taken place across the different countries on different basis like Poland makes a great change in banking industry after such reforms through rapid privatization. corruption. and there are many other factors that are relevant to know that how the ongoing reforms resolve the problem and challenges faced by the Serbia banking. (2008) reported that the objective of review article is to evaluate that how the reforms have been take place in banking industry of Serbia and to see its positive outcomes after creating reliable and sound banking system.
are focusing on more towards on liberalization philosophy. firstly adopted by most of the Central and East European (CEE) countries focused on rehabilitation approaches to bring the such reforms through the concept of decentralization of mono-banks into large number of commercial . in which CEE countries are getting slowly privatized their banking institution because of restructuring of nonperforming loans issue. 23 . Whereas the Countries who are following CEE approaches successfully coped with problem of nonperforming loans through comprehensive and operational restructuring of state banks. and the privatization of the state owned banks. while the countries who are following the approach of FSU. are more having skills and knowledge of how to operate the banking institution than the countries who are following the approach of FSU countries. This research article shows experience of three stages in case in which those who are belongs to CEE countries. On the other hand. like liberalization in terms of new entry of banks. FSU let ignored the issue of nonperforming loans. Whereas the second one. Those countries were following different strategies in both case of approaches like countries who are following CEE approaches tend to puts restriction in entry barriers to having limited competition. On the other hand FSU countries are more down towards the rapid privatization. recapitalization of state banks. as a result there are more small number of uncapitalized banks can be seen.approaches of reforms implemented. CEE and FSU are following different strategies related to privatization aspect. is the Former Soviet Union Republics (FSU) who bring reforms by adopting new entry approach in the form of decentralization of mono system banks in to specialized commercial banks. and privatization of state banks. state owned banks.
24 . This research article disclosed that what are the reasons that require bank to get privatize or sale of their government state owned banks (SOBs). By applying these reforms in banking industry of Serbia country. (2005) reported that privatization of state owned has been taken place in many countries because the FINANCIAL of financiaal management system is better than the Financial of government state owned banks. and even transition economies. maintaining safety. conventional bank is commonly involved in monitoring the Financial. The failure in banking practices can be because of number of reasons i. what are its impact on society of developing countries.e. Thirdly. they had come to know many issues regarding the change in consumer behavior. there are number of banks get privatized in order to improved their banking efficiency levels and it has positive impact on employees as well. The past researcher also revealed that impact of foreign ownership on efficiency of banks. secondly they transform claims issued by borrowers into other context of claims that hold by depositors. efficacy of banks & credit granting issue. lacking trust or confidence in their banking practices so these reforms have changed the concept of their customers and finally improved the Financial of banks. and the ownership structure of banks. As a result. W. Megginson L. banks generally perform three basic functions. organized. Regardless of the commercial bank location. and technical problems that will further help its banking industry to groom in right direction with right banking practices.Such reform in Serbian banking industry is to design and implement the proper framework for monitoring and supervision of many banks so that transform whole banking sector to overcome its prior failure practices. creditors and owners.. over 15 years time period. and transparency in the banking practices and even the practices of state & commercial bank varied across the countries. regulation framework. liquidity issue. firstly maintain the payment system.
and Hungary etc. The past researcher revealed that they evaluated the Financial of bank on the basis collected data. we have seen changes in the ownership of banks. This review of research article shows that privatized. consisting of six transitional economies related to the ownership of state owned banks. private and foreign owned banks including named as Poland. Romania. are having less incentives and opportunities than managers of private owned firms. due to number of reasons. One of reason of its inefficient Financial are because government owned bank lacks or keep leniency in monitoring their activities as compare to financiaal management system. 25 . The research article shows that state owned bank are weak in its Financial comparatively to financiaal management system because of its state owner managers. and even majority of private banks are turned into strategically foreign structure of banks out of these transitional economies. as a result they lack in monitoring the activities. like the SOBs aren’t working as per planned and even. and effects productivity as well. private and foreign ownership structure of banks are more reliable than government state owned banks according to the Financial and profitability point of view. lacks in growth of banks. This article disclosed that the government or stated owned banks unable to build the financial development system. and generating the less revenues for the firm. whereas they keep strictly check and balances. Where as they used measure of Financial of banks with respect to each ownership structure in terms of profitability ratios that is ROA (return on asset) & ROE (return on equity). it lacks in development of updated financial system.Over the last two decades. transferred from state ownership to privatized commercial banks across the different countries.
Whereas issue of 26 . how efficiently set up supervisory board. Privatization tends to contribute even in restructuring of newly privatized firms or banks that shows how the design of privatization is considered the important. even liberalization help to improve reliability of banking contract. The result of post privatization is to achieve the improvement in terms of efficiency. Banks also play important role in the progress of an economy and financial need of the different sectors so ownership structure of banks and institutional role are considered key variable in growth of overall economy. and Financial of bank. Those banks tend to move towards privatizations which have lower economic efficiency and solvency problems under the supervision of government ownership of banks. developing countries and transition economies but the way the banks or firms gets privatized are pursued different practice in different countries. That’s how the privatization has been taken place in many countries including developed. When we talk about the privatization of banks then we should take it as financial liberalization of whole financial sector because its process and procedures are too large and complex in developing countries. and making condition better for capitalization. credit risk exposure.e. This was experienced that financiaal management system Financial will definitely achieve the gains in efficiency and profitability in terms of increasing return on assets and return on equities. and the way it managed the banking procedures and the change in corporate governance of banks in terms of ownership structure and contribution of foreign banks. growth opportunities. and profitability through enhancing credit risk exposure..Narjess Boubakri (2005) determined that the effects of post privatization is significant on Financial of bank. There are also rare chances that the privatization of firms become remains unsuccessful but any how there are some determinants of privatization which makes it either successful or reason of failure i.
Secondly.e. Whereas privatization of banks are being done in developing countries in very slow pace through the local investors (Industrial groups) and foreign investors as well.e. return on equity. credit risk exposure and the capital adequacy. industrial groups and individuals investor. For variables related to the ownership structure of banks are categorized into four aspect of stakeholders i. According to this article. or the state). 27 .e. Whereas different researcher highlighted that privatization is being favorably done in transition economies mostly through the foreign banks (foreign investor) and it is proved through data that more half of the investment are done through foreign banks in case of privatization of government state owned banks in transition economies.. industrial group.ownership and corporate governance are considered important in process of privatization. government ownership. the effect of post privatization ownership structure is related to the leading owner (foreign investor. firstly to evaluate that whether the privatization has impact on Financial and risk taking behavior of bank or not in comparison of government state owned banks. it disclosed that they pursue two goals i. The reviewed research article includes only the effect of privatization (choice of ownership structure and corporate governance) on Financial of newly financiaal management system in developing countries and excluding the impact of post privatization over Financial of banking institution in case of transition economies. because it matters for improving the Financial of banks that how privatization is going on either through the foreign investor or through the local investor. foreign investor. It also disclosed that they have used four variables regarding Financial of bank in terms of profitability i. efficiency in terms of net interest margin.
Argentina. Bulgaria. So the reason of choosing these countries is only for evaluating that how does the bank denationalization (privatization) affects Financial of bank as in above 28 . et al (2005) reported that there is significant evidence available about the successful results of non financial institution after the privatization but there are limited evidence are available that shows how the privatization impact on the Financial of banks and improved it efficiency levels. Eastern European. Shirley M.For knowing the impact of privatization and ownership structure on Financial of bank. and when the foreign banks are interested in investing in the privatization process of banks. they have used commonly univariate tests and panel data estimation techniques consisting of 3 years sample data before the privatization. for that purpose they have gathered the data of privatization consisting of 5 separate countries including Pakistan. and others. The past researcher revealed the findings as the privatization had significant effect on Financial of banks including efficiency in terms of profitability. and Brazil. revealed that privatization of state owned banks improved their Financial and efficiencies of banks. Financial of bank after privatization can be produced better results when the government doesn’t restrict competition. According to the findings of past literatures.M. Nigeria.e. Hungary. and 3 years data after the effect of post privatization. Poland and Romania. It further disclosed that the privatization of financial institution like banks improved their Financial and efficiency in more better way when the government state owned bank completely transformed as privatized bank means Government doesn’t have any share in that privatized bank. and credit risk exposure and capital adequacy variables. while other 11 countries from the two regions i. Croatia. Mexico. and the second region from Asia including. Malaysia. the Czech Republic.
It also revealed that there are still major stake of state owned enterprises in developing countries which affects the Financial and efficiencies in terms of less profitability. Although some Financial measures of banks improved in most of the mentioned countries but not necessary to improved all Financial measures in every developing countries. In order to reduce the need of subsidized. and for that purpose they impose restriction on entry to do trade. as a result it affect efficiencies of institution. & private banks because government banks decisions are politically influenced for the sake of so called politicians benefits. even the government banks are excessively hired the employees which creates extra burden on growth of government institutions or banks. the financiaal management system are able to improve their Financial through limiting the interventions of government. the politicians try to protect the government institutions from the competition.mentioned regions because there are lots of government banking institution which either transformed into partially or as fully financiaal management system and even few privatized strategically through foreign investor during the denationalization period and at the same time. and so the new owner is unable to lower down the cost. There are number of reasons that government owned banks and institutions are weaker in its Financial than the Financial of Privatized. The government state owned banks are lacking in competition with the private banks in these competitive market due to political interest that affects its Financial. encouraging competition level through reducing restrictions under the supervision of state. consider the case of Argentina. In comparison of state owned banks. In short privatization improves the Financial of banks but it will have negative in few 29 . their Financial measures in terms of profitability has increased as the time lapses but the cost efficiency doesn’t show significant increased due to having restriction in case of firing and closing the branch.
will lost the opportunity to get flourish by the financial development system. Although the preventing the entry of foreign investors in the process of privatization. According to the research articles. PRIV (private). like partial ownership of banks reduces the level of efficiency and put some restrictions altogether. They used measure as data envelopment analyses to evaluate the efficiency indexes of each bank.cases. the past research is conducted to evaluate the index of banking efficiency by taking data sample of 42 commercial banks comprises of government banking institutions. They disclosed that the Financial of state owned banks are far behind in terms of efficiency than Financial of international and PRIV ownership banks.A. oligopolistic banking reduces the efficiency and resulted as poor outcomes in financial system. Such transformations brought improvement in banking industry’s practices in Pakistan by improving the stringent prudential rules and regulation. considered the best measure to evaluate and forecast the Financial of banks in present and upcoming scenario. for that purpose they further split 30 . Whereas the competition is the source to increased their banking practices and Financial but on the other hand. We have found that profitability. (2006) reported that financial reforms and liberalization have been taken place in many developing and transition countries like Pakistan during the 1990s and found that the private (PRIV) and foreign banks had started freely to compete with state owned banks. in terms of ROA (return on asset) and ROE (return on equity). Burki A. and even dominance of government ownership banking institution in any economy tends to decline in GDP growth & unable to use efficiently the banks resources comparatively to PRIV and international banking institution. & international banks from period 1990 to 2000.
The banking situation of Pakistan is not so flexible during the period of nationalization from 1972 to-1990 and there were 5 nationalized banks in past. In case of first reforms. and transform the banks under the umbrella of private and foreign banks in order to improve the efficiency level of banks. After that the Banking Council of Pakistan was dissolved during year. private and foreign banks tried to enhance the competition level. and the second reforms period from 1997 to 2000. restructuring of state owned banks. 31 .e. and non-performing loans with index of banking efficiency. The variables used for evaluating the banking efficiency based on the data of aggregation of asset. As a result. But as the period lapses. 1992. which actually play the vital role in case of reforms and progress of overall banking sector. related to pre-reforms period (1990-1992). the process of liberalization in banking sector and insurance sector were taking place. SBP (State Bank of Pakistan) was remained as the supreme banking authority for every commercial banks. asset quality. they strengthen the prudential regulation and bring many changes in the structure ownership of banks through the source of privatization. Afterwards. & three international banking institutions. but unable to transform the cost inefficient banks in to efficient banks. state owned banks. in the second half of the year. the initial changes were taken place during the phase of first reform. The past researcher discovered an association exists among bank sizes. the efficiency gained by the PRIV and international banking institution is much higher than the government ownership banking institution across the countries. there were seen new entry of ten PRIV (private) banking institution. But from the period 1991. 1997. Whereas government banks of Pakistan like MCB and Allied Bank Ltd got privatized in 1993. the first reforms period from 1993 to 1996.the data in to three categories i. number of branches.
and to give full autonomy to state bank. in which the primary objective to make easy the entry of newly private and foreign banks. According to state bank report. MCB and ABL Ltd). Hence. while the other financial institution. (2004) reported that banking sector development pursuing an indispensible progress in economic development that’s how the homogeneous role of banking limited the growth of an economy. and lacking number of bank employees. 32 . and private banks are able to avail cost saving advantages and increased bank profits that’s how the efficiency of financiaal management system are better than stated owned banks under the ownership of foreign and private banks. whereas the past researcher wanted to examine that how to increase the banking efficiency by means of operational specialization and diversification and size expansion of banks. Banking sector play a vital role in developing economies through examining the patterns of credit allocation by the banks. bank based system are considered more viable for increasing the economic growth at an early stage than following market oriented financial system. They disclosed that state owned banks are large in size but less efficient in Financial. Whereas the first reforms have been started in Pakistani banking industry from 1980s to 1990s. Iimi A.liabilities. where as in the second reforms. they identify several financial indicators for evaluating banking efficiency and disclosed that banking reforms have the positive impact on increased asset and deposit mobilization. revenues. (e.g. costs. and improve prudential regulation and auditing standards of banks. consisting of complete data related to 21 conventional banks throughout the years from 1991 to 2000. the key objective to transform the partially financiaal management system into fully private banks.
Secondly banking industry enjoyed large economies of scale with low economies of scope. Thirdly from efficiency point of view. DFIs. the privatized commercial banks (PCBs). According to past research findings include that the firstly non-performing loans put excessive burden on the costs of banking institution. Prov. at overall level. and provincial banks (PROV) are having high efficiency levels. On other hand scope economies have positive impact on small and medium enterprises. PCBs. In short the banking 33 . and seemingly unrelated regression model (SUR).e. than the state owned banks. and Development financial institutions (DFIs) which are suffering from Xinefficiency levels and that is a reason. Specialized banks (SP).According to this article. as the bank size increases the bank will suffer from scale diseconomies. Whereas. that researcher had used two econometric model for estimating the cost function as stochastic frontier analysis (SFA). where as the large institutions including banking intuitions suffered from scope diseconomies that’s how the small enterprises have more opportunity to have cost saving advantages through operational expansion and diversification. NCBs. PBs. Private banks (PBs). and FBs during the period of 1998.to 2001. Foreign banks (FBs). the state owned are suffering from losses but still continue to operate for the sake of political interest. SBs. the private banks and foreign banks are operate in larger economies of scale with low scope economies that how it has more opportunity to do cost reduction per unit size expansion through operational diversification. They also disclosed that the banking efficiency is evaluated on developed countries that how the 95% literature related to measuring bank efficiency is from the developed countries like most of the US Banks. For that purpose they have taken the data consisting of 41 financial institutions operating in Pakistan i. whereas scale economies have inverse relation with bank size.
sector should be liberalized. Whereas the many econometric models used for evaluating the efficiency and productivity of banks by the past researchers but most of them are focused on the developed countries because the microeconomic level data isn’t easily available in developing countries. other domestic banks (private banks). these reforms have significant effect on Financial of commercial banks so that can be measured through microeconomic level data which is considered valuable in terms of assessing the effect of transformations over the level of efficiency. and international banks have superior Financial than government banking 34 institution. This was realized that changes in Financial regarding individual banks or any institutions resulted in the change in its ownership and governance. It is proved that the dominance of State owned banks in any country lead to decline in the growth of an economy where as denationalized banking institution. According the past researchers. and deregulated to achieve the levels of economic efficiency. prices. These reforms kept considerable importance in case of measuring bank productivity and effectiveness in terms of increased profits. The new entrants like private and foreign banks outperformed and earned high productivity in terms of rising profits level. incomes. Sometimes the weak . via new entrance of other domestic private banking institution and foreign banks. & productivity of banking institutions across the country. stringent policy of prudential regulation. The past researcher disclosed that financiaal management system enjoyed increased profits after the immediate privatization by focusing on element of efficiency with respect to Financial of state owned banks. Hardy et al (2005) reported that the Pakistani banking sector started flourishing over the period of past fifteen years ago by means of privatization of government banks. Daniel C.
there were seen moderate profit due to increase in productivity profits which have significant effect overall even than the negative changes occurring in the business conditions. they have conducted two separate analyses. there were booked losses and dispersed profits of banks across the each type of banks. first analyses is concerned to effect of transformations in AC (average cost) & banks profit. the profits and cost function are measured through evaluating the variation in the variables in terms of change in productivity and business conditions. During second reforms period. The past researcher has taken the sample date during the reforms period of 1981 to 2002.denationalized banks (financiaal management system) by the foreign banks due to considered more reliable in Financial and productivity so expansion or subsidiaries of foreign banks may have significant impact on banking system. financiaal management system. But after the second reforms period (1993 to 1998). there were seen 35 . They have used model Least Absolute deviation (LAD) as an estimator along with OLS and GLS technique to measure the efficiency in terms of cost and profit function accordingly. In second analyses. private banks. For measuring such changes on AC (average cost) and profits of bank are associated to changes in productivity and changes in business condition through best practices and efficiency levels of banks. and foreign banks. To assess post and prior effect of reforms. For evaluating the effects of pre and post reforms on financial Financial and efficiency of banks. It is also cleared through results that financiaal management system improved its Financial after the reforms comparatively to Financial of state owned banks. In case of first reforms period (1991-1992). they measured the efficiency of individual banks basis on individual scores and then compare their Financial of individual banks across the each bank type including state owned banks.
and partially retain the maximum shares in the ownership of financiaal management system would limit the growth of such banks. In many countries.less increase in profits level comparatively to more increased intense business conditions exist in the banking sector. it will fill out the deficiencies through privatization. so the privatization played important role in boosting the efficiency of financial intermediation in such economies. These researcher measured Financial of financiaal management system on the basis of ROA (return on asset). the privatization has significant effect over Financial of bank but those countries in which the government wouldn’t encourage the foreign ownership. so Nigerian economy decided to measure the Financial of financiaal management system based on pre and post effect of privatization & comparison of financiaal management system Financial with respect to the Financial of other domestic private banking institution in the Nigerian banking industry. The privatization of 14 banks have been taken place in Nigeria at fast pace during late 1990s. ROE (return on equity). & NIM (Net interest Margin). NPL (NON performing loans). They disclosed that there was gap exist if observe the bank Financial before privatization but when the privatization took place. Whereas the developing countries are poor in Financial because of large number of government banks. but on the other side. (2005) reported that the privatization have significant effect on the Financial of nine Nigerian banks over the period of 1990s to 2001. They have taken the data sample of nine financiaal management system along with two state owned banks to measure the Financial of bank after the privatization and the data of 24 merchant state commercial banks to compare with the Financial of 36 . there was financial crisis across the globe. Robert Cull et al. but before the privatization particular bank lacks in Financial comparatively to other private owned commercial banks.
It is true that the privatization is taken place of weaker institutions so that it can improve Financial of such bank in terms of increasing the significance level in ROE and ROA and decline in significance level of NPL. but according to past researcher. (2007) reported that there were seen privatizations of 12 banks in the Egyptian banking sector during the period of 1996-1999 from the state ownership to financiaal management system. banking sector is considered the backbone of the financial sector because it possess largest share of 50% of the asset. for that purpose they firstly wanted to examine that how the pre-post privatization have affect on Financial of bank. ROE and NPL because not all variables are available to analyze the Financial for every bank. ROA.. state owned banks. secondly they wanted to examine the changes which occur due to the effect of privatization and then evaluate the such changes in comparison with Financial of private banks. In Egypt. mixed private owned and foreign owned banks. Omran disclosed that the privatization has different result on different economy and during analyses. He disclosed that the Financial of privatized bank is better than the ownership of state owned banks. major partial ownership of government owned banks and major 37 . they observe decline in profitability and liquidity ratios but other measures do not change with the effect of privatization. Whereas the only difference is the significance level on ROA among the Financial of privatized and Merchant State owned banks. they had limited the scope of investigating the effect of privatization on the Financial of bank. Omran M. For these sample data they have complete information with all respect.financiaal management system. but the Financial of financiaal management system are weaker than the other forms of private. so they measure the Financial of bank on the basis of three variables i. Whereas the financiaal management system have significant impact on ROE regression but it lacks in significance of ROA regression along with significant decrease in NPL.e.
are better in productivity and banking efficiency than those banks. operating risk efficiency. and NIM (Net interest margin) for evaluating the impact of before & after denationalization (privatization) incase of Financial of financiaal management system. Whereas ROA in case of financiaal management system (Mean and median) is 0. Whereas. and considered the control transfer the ownership of public to private ownership lead positive result in terms of profitability because the private management has major concern on profitability as compare to state owned banks. 0. In short.e.060. and asset growth.e. ROE in case of Financiaal management system (Mean and median) is 0.164 and comparatively ROE is lesser in case of Government owned banks (Mean and median) i. 0.008. The past researcher disclosed that the previous researcher utilized sample data consisting of 12 Egyptian banking institution based on years from 1996-1999. capital risk indicators. which are having major ownership of government owned banks and fully state owned banks. ROE (Return on equity). profitability indicators (ROA and ROE) shows significant increased in FINANCIAL of bank after the post privatization.partial ownership of financiaal management system. Whereas its result shows that those banks which have large share of private ownership. Even they explore the post privatization effects on Financial of bank. the result of their outcomes show that the post-privatization decrease in profitability and liquidity ratios but there was observed insignificant changes in other measures including loan quality (asset quality). The past researcher wanted to examine that the privatization should have significant effect on the Financial of privatized bank. Similarly.014 and comparatively ROA is lesser in case of Government owned banks (Mean and median) i. they have used many variables like ROA (Return on asset). 38 .
Foreign owned banks improved the banking sector Financial by raising the competition bar among the each type of ownership of banks. Whereas they have used the sample data of six advances transitional economies named as 39 . it is possible through participation of foreign owned banks in the privatization process of domestic state owned banks. the FINANCIAL of domestic (private) banks is considered more efficient than the Financial of government owned banking institution. private and international banks are having enough proficiency in Financial with respect to the Financial of government banking institution. With respect to issue of bank ownership. Even the FINANCIAL of financiaal management system is more profit motivated because of change in objectives.Hasan I. et al (2005) reported that privatization matters in case of efficiency and Financial point of view because government owned banks are least efficient as compare to Financial and ownership structure of foreign owned banks. Whereas foreign owned banks are the most efficient banks. In 1990s. that’s how the foreign banks Financial is associated with the improved banking efficiency because they are surveying their customers at cost efficient basis but less profit efficient basis immediately after the privatization. it would have significant affect in Financial of financiaal management system. privatized. On the other side. the financial reforms and bank privatization have been taken place in these transitional economies so they wanted to evaluate that whether the bank privatization has affect on Financial of bank. That’s how the early financiaal management system are more better in Financial point of view than those banks which get privatized later because in past. so if the privatization process took place through foreign ownership of banks. Foreign ownership of bank play vital role in the growth of banking sector. They also disclosed that the foreign banks perform better in developing countries than their domestic owned banks.
0042 in case of Government state owned banks. and Romania for analyzing the effect of privatization on Financial of bank.e. Hungary. but the Financial of international (foreign owned banks) banking institution is considered more superior with respect to the Financial of financiaal management system so the privatization which is taken through foreign ownership is considered more efficient than under other bank ownership.Bulgaria. 40 . ROA is 0. but ROA measured of financiaal management system is sometimes less significant than the Financial measured of foreign owned banks in terms of ROA ratio. They have used Financial measures i. In short privatization matters for improving banking efficiency levels of government owned banks because the Financial of privatized is better than the Financial of Government owned banks. Even ROA is 0. Poland. net interest margin and equity ratio and few more variables and summarize that ROA (return on asset) of government owned banks is less significant than the Financial measured of financiaal management system in terms of ROA ratio. Croatia. but NIM is not increased significantly in state owned or foreign owned banks after the privatization. Whereas the net interest margin is highly significant in financiaal management system than in de novo private banks.0224 in case of foreign owned banks. They have restricted in selecting the banks having large asset size consisting of these 6 Advanced TEs because of homogeneity is important for evaluating the affect of privatization on basis of individual banks.0176 in case of Financiaal management system. and ROA is 0. return on asset. the Czech Republic.
After reviewing the literature of past researchers.METHODOLOGY Introduction: The purpose of this chapter is to review and make an understanding regarding different methodology and its research approaches and research design. and through analysis of past secondary data of denationalized banks in terms of profitability ratios. For application of my research study. For investigating the outcome of bank privatization on its Financial in the Pakistan that require first to know that does the have significant impact on its Financial of bank & secondly does the bank able to sustain and improve its Financial after the postprivatization. I come to know that the Financial of government banks may influenced after the FMS in developing countries. I have used selected research approach and design as per the requirement to conduct the study the effects financial management system its bank Financial in the context of Pakistan. and transitional economies but it is observed that the improvement in Financial of financiaal management system would only sustainable for shorter time period. 41 .
In my research study. Research Design: 42 .Objective: The objective of this study is to examine the effect of financial management towards financial of bank in the Pakistan. In case of primary research. Couldn’t the privatized bank able to bring improvement & sustain its Financial of banking operation in Pakistan. Does the privatization have significant effect on its Financial of financiaal management system. Research Approach: Quantitative Approach: This research study is focused on the quantitative approach because it is such type of approach in which the researcher required to quantify their study through asking selective or narrow questions (closed end questions). Whereas the quantitative approach illustrates by name that it is based on objective realities. it is moreover required to make close end interviews by making questionnaires and all that. But commonly I have observed that quantitative approach is purely focused on analyses of secondary data. This approach is considered measurable one in terms of physical quantity and in facts & figures. collecting such data which could be either easily available from participants (in case of primary data) or quantifiable and available through using statistics as secondary source in a manner that is the data collected remained in unbiased form. I want to evaluate the effect of bank privatization on its Financial through analyzing the profitability ratios of four financiaal management system based on past year data in the context of Pakistan. Through my study. I wanted to know that why does the bank privatization get stopped in Pakistan.
This research aim is to investigate a specific problem that needs a solution in systematic and organized effort. This study is purely focusing on the causal comparative research design in which measuring the cause and effect relationship between the two variables bank privatization (independent) & its bank Financial (dependent) variable. Whereas the reason of choosing this design is due to characteristics of independent variable i.e. Whereas the Financial of financiaal management system are required to measure in terms of profitability 43 . Casual Comparative Research Design: I have used casual comparative research design to support my study because I require investigating the effects and then causes related to variable bank privatization and bank Financial in the frame of Pakistan. and NIM (Net Interest Margin). bank Financial in terms of profitability ratios and one efficiency ratio. bank privatization which can’t be manipulated and simultaneously require group comparison on dependent variable i. ROE (Return on Equity).e. it is very important that the research design should give a strong base so for conducting this research requires investigating cause and effect relationship exists between the variables bank privatization and bank Financial in comparison to before and after privatization in terms of profitability ratios and an efficiency ratio in the frame of Pakistan. (ROA) Return on Asset. In this research design.e. For this purpose. Whereas I found that bank privatization as a one variable and Financial of bank as second variable which is further divided into sub-Financial related variables i. I want to evaluate the effect of pre and post privatization on financial of four selected banks in the frame of Pakistan.
gov.pk. Data Source: This research study is focused on Secondary source of data. 1 2 3 www.mcb.com www. which includes the related data of profitability ratios comprising of four financiaal management system (MCB. For my research study I have consider twenty five years of annual data before the privatization & after the privatization of those banks in order to know that either the bank privatization has significant effect on its Financial or not.com.test technique to evaluate this cause and effect relationship among variables. so I have chosen all four financiaal management system to conduct this research study. www. Whereas the four financiaal management system are named as United Bank Limited.pk 44 . Muslim Commercial Bank Ltd.pk.sbp.pk www. HBL. all the secondary information would be collected from reliable sources like Annual reports of financiaal management system From State bank website 2 1 From Privatization Commission Pakistan. These all banks are belonging to conventional banking system. In fact.ubl. Habib Bank Ltd & Allied bank limited.privatisation. It is all possible through using Paired Sample T.pk.com. Analysis apply will require to investigate the related matters of research. ABL. 3 Selection of sample: There are four government banks get privatized in Pakistan up till now.abl. www.com.hbl. www.ratios and one efficiency measure. & UBL) annual reports in different time period from 1985 to 2009.org.
so I refer to gather then annual data of these four financiaal management system till at least twenty five years annual data in order to analyze the effects of pre and post privatization on bank Financial in the context of Pakistan. Habib bank ltd (HBL) & 45 . Further I required measuring the Financial of financiaal management system based on collected data and sample size in terms of profitability ratios based on collected data of annual reports of these four financiaal management system. ABL. It would be 32 number of observation based on sample years taken in case of combined comparison of four financiaal management system. even it is not available in State bank library. and HBL from year 1985 to 2010. I found Paired sample t-test would be suitable for quantifying the effect of variables to each other with respect to my research study. I required to apply the paired T-Test technique on the basis of collected data which is mentioned above in detail related to profitability ratios of four financiaal management system. Paired sample t test technique: As far as concerned to my research study. I want to evaluate the Pre & Post effect of bank privatization on its financial Financial for basis on selected sample data & time period. Whereas I have gather annual data of four banks i. MCB. Whereas. Allied bank ltd (ABL). For application of multivariate technique. named as Muslim commercial bank ltd (MCB). UBL.e. I required to collect quarterly data of these four financiaal management system in order to increase number of observation or sample size but due to data constraint I couldn’t able to get quarterly data.The sample size of data would be based on eight years comparison of each four mentioned banks before and after privatization so number of observation is based on number of years taken in comparison of each bank that’s how the sample data is collected to keep in view the effects of before and after privatization number of years.
and net interest margin (NIM) to measure the pre and post effect of bank privatization on bank Financial in the context of Pakistan. return on asset (ROA). Variables Description: To examine the effect of privatization on Financial of financiaal management system. Whereas variables of my research study are named as return on equity (ROE). Whereas the ‘bank privatization’ is it self 46 . the different researcher may have used descriptive statistics (like they have calculate mean & median of Financial measures i. b) H1: µD ≥ 0. the alternate hypothesis states that the FINANCIAL of bank before privatization improves with the FINANCIAL of bank after privatization. (ROA & ROE) & some other researcher may have used paired T-Test for their research study. according to past researcher.United bank ltd (UBL) in the context of Pakistan. I have taken out most similar variables from past research articles for conducting this quantitative research study. the null hypothesis states that the FINANCIAL of bank before is remained same with the FINANCIAL of bank after privatization.e. Whereas. Research Hypothesis Hypothesis is based on testable assumption and here its objective to apply the suggested technique for conducting my research study Ho: Privatization has insignificant impact on bank Financial in Pakistan H1: Privatization has significant impact on bank Financial in Pakistan Test Hypothesis Paired Sample T Test: a) Ho: µD = 0.
ROA. I found that the profitability measures would be most suitable for determining the effect of pre & post privatization on bank Financial. is measured through dividing ‘the total sales by total asset’ for selected sample time period. The ROA (return on asset) in percentage shows how profitable a company's assets are in generating revenue.e. and NIM. After reviewing the past literatures. But on the other hand. it isn’t used or not considered suitable for comparison of two industries because of abnormal capital 47 .considered as independent variable which is further treated as pre and post effect of privatization. the transfer in ownership structure of banks from government ownership banks to privatized owned bank through either local investor. mentioned below Return on assets (ROA) For determining the ratio. Through focusing on my research design and research approach. Whereas I found that the bank privatization from foreign banks ownership would improve the Financial in better way than ownership of banks acquired by the local investor. ROA. So I first defined that what bank privatization means. ROE.e. Return on asset (ROA) is considered useful indicator in case of comparison of two companies in the same industry because it tells that how the profitable a company is before taking leverage. Whereas I have used two Profitability measures for conducting my research study i. or foreign investor. I found that bank Financial would be appropriate variable for measuring the effect of pre and post privatization on financial Financial of four selected banks in terms of profitability and efficiency measures. Secondly the common variable is ‘bank Financial’ taken as dependent variable which is further analyzed in terms of bank profitability and efficiency measures i.
Return on asset is one of suitable indicator in which total asset figure of companies is based on carrying value of assets. When firm is interested to increase its financial leverage then it means firm’s concentration is focused on debt 48 . ROE is best measure used to compare companies in the same industry including banks. stated in terms of percentage. This ratio helps in assessing company’s proficiency through earning incomes from each unit of shareholder’s stock. if the asset turnover is increasing. Return on equity (ROE) is similar to financial years net income divided by total common stock (excluding preferred stock). On the other hand. Return on Equity (ROE) For determining ratio. As with many financial ratios.requirements such as reserve requirement in case of insurance and banking sectors. ROE is easy to understand with the passage of time if it is divided into 3 parts and put it altogether like incase of increasing net margin. ROE tells that how a firm uses shareholders investments to generate earnings. the carrying value of asset is either equal or close to actual market value of asset. is measured through dividing ‘the Shareholder’s Equity by total asset’ for selected sample time periods. then it would be the same situation that is raised in number of sales against every unit of owned asset which further brought to change in higher ROE ratio. And even sometimes companies or investor pay attention if the carrying value of the asset is not equal to the actual market value because ROA is used to measure the Financial of financial units in such case. ROE. sale would be more and it brought more money which is further resulted in increased in overall ROE ratio.
financing comparatively to equity financing that’s why the ROE would be higher in company’s financial position if the debt portion is found more in the company’s capital structure.
Net Interest Margin (NIM)
This study is interested to use one efficiency measure to determine the effect of pre & post Financial of financiaal management system i.e. NIM (net interest margin). NIM is a ratio between interest income earned by financial institution or banks and the interest amount paid out to their borrowers like deposits. NIM (net interest margin) is considered as equivalent to gross margin incase of non financial units or say companies. NIM tells that percentage amount earned income by the financial institution on borrowed loans in a given time period. NIM is the ratio between the differences of (interest amount paid by borrowers from deducting other assets) and divisible by average earning asset (means those average amount of asset in which income is earned in that time period). Bank FINANCIAL considered as dependent variables in this research. Whereas to measure the effect of pre & post Financial of financiaal management system in terms of profitability ratios, I have used two commonly profitability measures & one efficiency measure i.e. ROA (return on asset), ROE (return on equity), & NIM (Net Interest Margin). After reviewed literature, I came to know that ROA, ROE, & NIM are considered as best measure to evaluate the Financial of banking institution after its privatization.
This chapter will present an analysis of empirical data gathered related to financial Financial of bank in comparison to before and after privatization. Data analysis will help to analyze the cause and effect relationship between variable bank privatization and bank Financial in terms of profitability ratios and efficiency ratio with the help of using paired sample t test technique in this study. I have done data analysis in two separate parts, firstly; I have collectively analyzed the Financial of four financiaal management system in terms of profitability ratios before and after privatization by applying paired sample t test technique. Secondly, I have done separately data analysis of individual financiaal management system to know that does the individual bank improve its Financial after getting privatized which is attached in appendix as well. Whereas I have used FINANCIAL measure in terms of profitability ratios i.e. return on asset, and return on equity and one efficiency measure i.e. net interest margin in case of bank privatization.
Table 4.1: Summary Statistics for all Banks
N Return on asset Post-Test Scores Pre-Test Scores 32 32
Mean 1.4459 0.1829
Std. Deviation 0.93208 0.17243
Return on equity
Post-Test Scores Pre-Test Scores
Net interest margin
Post-Test Scores Pre-Test Scores
The above table 4.1 is providing assistance in determining the FINANCIAL of financiaal management system collectively in terms of these profitability and efficiency ratios by applying paired sample t test technique. Whereas N shows number of observation considered i.e. 32 comprised of four financiaal management system i.e. MCB, UBL, HBL and ABL in both case of pre and post privatization. The mean value of ROA before privatization is 0.1829, in comparative, there is found significant change in mean value of ROA after privatization i.e. 1.4459 due to improved Financial of financiaal management system that is because of increase in total asset value and income of financiaal management system in case of post privatization period. The standard deviation shows least amount of variation in
20. 3.e. decrease in asset or loan quality of financiaal management system.e. 52 . the mean value of NIM after privatization is 16. and credit quality (policy) in collectively financiaal management system.24981 as compare to ROEPost i.e. inappropriate asset and investment utilization to profitable business units during buying or selling assets. The standard deviation shows least amount of variation in NIMPre i. The standard deviation shows least amount of variation in ROEPre i. There is found significant decline in mean value of post test score of NIM comparatively to the mean value of pre test score of NIM i.3428 which are lesser than the mean value of NIM before privatization i. comparatively. lack in efficiency measure.e.e.17243 as compare to ROAPost i.e.e.96962 as compare to NIMPost i.e. 0. This significant change is because of two reasons i. 0.e.e. 7. 10.93208 during analysis of pre and post FINANCIAL measure of financiaal management system. The significant change in case of standard deviation of pre & post ROE may be because of lack of trust and unequal distribution of return among their shareholders.11483 during analysis of pre and post FINANCIAL measure of financiaal management system.4184. This significant decline in improvement is only because of lack in efficiency levels.ROAPre i. The significant increase in case of standard deviation of post NIM measure may be because of improper application of interest. there is found significant increased in mean value of ROE after privatization i. 22.9381.25046 in case of pre and post FINANCIAL measure of financiaal management system. This may be because of improper cost and benefit analysis. The mean value of ROE before privatization is 7. increase in income of post financiaal management system and then raising the equity level of shareholders through distributing higher return to them in post privatization period.6341. 26.
97388 0. The standard deviation shows least amount of variation of pair ROA pre & post i.17216 0.tailed) 15.e. deviation Std. It definitely later affected on level of growth of banking sector in positive terms.(2. Such value of standard deviation is because of 53 .000) 0.I.010) From above table 4.30406* 13.68945 3.600 31 (.26303* 0.53497 2. of the Difference Lower Return on asset Return on equity Net interest margin 1. 0.2: Paired Samples Test for all Banks Paired Differences Mean Std.336 31 (.2630*.03338 6.Table 4.65741 17.755 31 (. the mean value of pair ROA pre & post is 1.11739 2.91191 Upper 1.57474 20.2. There is found stable position or better Financial of banks in case of post privatization period. this positive value shows that the average mean Financial of bank improve throughout the sample years taken in case of post privatization period in paired sample t test.000) t df Sig. Error Mean 95% C.07563* 20.97388.31885 10.61415 7.61628 2.
000 which is less than 0. 54 . 0. 31. employees.e. Whereas the degree of freedom is calculated by N-1 formula in paired sample t test. 13. In case of pair ROA. & financial Financial of financiaal management system. In case of pair ROA.e.improved management.e. It may be because of increase in competition level and decrease in intervention of government. The standard deviation shows least amount of variation of pair ROE pre & post i. In case of pair ROA.91191” and “1.11739. value of t statistics is positive i. In case of pair ROA. this positive value shows that pre & post are pre & post the average mean Financial of bank is improved throughout the sample years taken in case of post privatization period comparison to pre privatization in paired sample t test. The mean value of pair ROE is 15.05 that shows significant result so I can reject null hypothesis and conclude that there is observed significant change in financial Financial of bank after privatization in terms of ROA ratio as compare to before privatization of selected banks in paired sample t test. 7.e. Whereas standard error mean of pair ROA 0.336 which mean sample mean is greater than the population mean. since P value is 0.17216.3040*. Definitely improved in such FINANCIAL measure helped in improving not only FINANCIAL of overall banking sector but it also strengthens the growth of an economy.97388.161415” respectively but the confidence interval limits doesn’t contain zero. Whereas variation in case of pair of ROE is more than pair of ROA due to improper or unequal distribution of income to their shareholders i. the degree of freedom shows a number of observations selected in random sample i. Confidence interval has the lower and upper limit “0. Standard error mean tells the extent of error in the data of population mean in paired sample t test.
0333” respectively but the confidence interval limits doesn’t contain zero.000 which is less than 0. In case of pair ROE. Standard error mean tells the amount of error exist in the data of population mean in paired sample t test. In case of pair ROE.e.05 that shows significant result so I can reject null hypothesis and conclude that there is observed improvement in financial Financial of banks after privatization as compare to before privatization of selected bank in paired sample t test.e. banks return is increasing in terms of increase in mean value of NIM measure. 6.e.31885. Whereas variation in case of pair of NIM is more than pair of ROA & 55 . The mean value of pair NIM pre & post pre & post is 0.68945. the level of efficiency is improved for the sample years taken in case of after privatization comparatively to before privatization of banks. The standard deviation shows least amount of variation of pair NIM i. In case of pair ROE. Whereas standard error means of pair ROE 2. pre & post 20. value of t statistics is in positive i. 31.57474” and “20. In short. Confidence interval has the lower and upper limit “10. the degree of freedom shows a number of observations selected in random sample i.07563*.600 which means sample mean is greater than the population mean. this positive value shows that the average mean Financial of bank in terms of pair NIM is improved throughout the sample years taken in case of post privatization comparison to pre privatization period in paired sample t test. This significant increased in FINANCIAL of financiaal management system not only improve the FINANCIAL of overall banking sector but also it increase the level of growth in the economy. since P value is 0. Whereas the degree of freedom is calculated by N-1 formula in paired sample t test.In case of pair ROE. In other words.
e. Whereas.65741. since P value is 0.pair of ROE due to increase in return in short term.05 that shows significant result in bank Financial after privatization so I can reject null hypothesis and conclude that there is observed significant change or improvement in financial Financial of bank after privatization as compare to before privatization of selected bank in paired sample t test. the degree of freedom shows a number of observations selected in random sample i. 56 . 31. In case of pair NIM.61628” respectively but the confidence interval limits doesn’t contain zero. value of t statistics is in positive i. In case of pair NIM. In case of pair NIM.53497” and “2. & due to decrease in bad application of asset and loan quality. In case of pair NIM. Standard error mean shows error in the data of population mean in paired sample t test. The large value of standard deviation in pair of NIM shows that the financiaal management system are unable to maintain its efficiency level consistently.e. the degree of freedom is calculated by N-1 formula in paired sample t test.010 which is less than 0. Confidence interval has the lower and upper limit “17. 2.755 which means sample mean is greater than the population mean. Whereas standard error mean of pair NIM pre & post is 3.
8667 -22.tailed) 57 .003) (0.007) 1. deviation Std.3: Paired Sample Test for Individual Banks Bank Mean MCB Bank Return on asset Return on equity Net interest margin UBL Bank Return on asset Return on equity Net interest margin 1.753 0.858 26.6151 8.14918 2.30* 0.5369 11.0914 1.I.632 9. Error Mean 95% C.755* 18.16* -15.6312 5.809 10.456 -3.4820 4.000) (.358 29.0962 1.31116 4.572 0.8948 27. of the Difference t df Sig.982 1.11061 -18.537 0.860) Paired Differences Std.641 4.741 7 7 7 (.008) (0.3634 11.599 3.42196 6.7012 -24.183 7 7 7 (0.(2.Table 4.0157 10.463* 24.362* 1.81614 29.000) (.4429 Lower 0.787 Upper 2.
account receivable and inventory turnover ratio.92745 0.HBL Bank Return on asset Return on equity Net interest margin ABL Bank Return on asset Return on equity Net interest margin 0.05 in each pair comparison of return on asset (ROA).3 shows insignificant P-values i.15415 -8.369) (0.938 0.4504 1. (0.01216 16. ‘-13.63 1.265 0. That is may be because of other factors that considered more relevant to influence the Financial of ABL in case of before and after privatization period instead of measuring its financial Financial in terms of profitability ratios.61409 1 9.9572 0. (0.808 -1.63’ 58 .094).960 2.007) (0.974 3. return on equity (ROE). so in such case there are factors that could consider important in measuring its financial Financial like improvement in advancement.9074 -29.9274 16.22792 3. From above table 4.133* 12.64465 9.5938 0.056) which are greater than 0.056) 1.e.3612 5.369). & (0. bank deposits.3 shows analysis of individual banks by using paired sample t test technique.9847 5.097) The above table 4.002) (0.67269 20.59481 4. and net interest margin (NIM) of Allied Bank limited (ABL) that shows these FINANCIAL measure of ABL are not improved after privatization.e.8497 0.94* 13.7000 5.3990 6. In case of analyzing ABL bank Financial. I found decrease in mean value of pair comparison of NIM measure i.915 7 7 7 (0.289 7 7 7 (0.11583 4.9825 3.7229 1.842 0. But it doesn’t mean that the ABL Financial aren’t improved due to privatization.7425 -13.5541 19.094) (0.4092 -27.6458 1.
e.05 that means I can reject null hypothesis because there is observed significant improvement in financial Financial of HBL bank after privatization in terms of improving profitability ratios except measure NIM with respect to before privatization in paired sample t test.000) & (0. return on equity and net interest margin even its mean value get improved that means return is improved in such pair comparison of these two measures (ROA & ROE).3*’ that may be because of decrease in efficiency level of NIM measure in case of post privatization period.000). ‘-15. it shows significant p-values in pair comparison of return on asset. return on equity but except measure net interest margin that is its p.due to decrease in efficiency level and return (interest margin) of bank after process of privatization for short term period. its pvalues of pair ROA (0. (0.05 so I can reject null hypothesis and conclude that there is observed significant change or improvement in financial Financial of UBL bank after privatization in terms of these ratios as compare to before privatization by using paired sample t test technique.05 that means null hypothesis can be rejected and conclude that there is 59 . In case of United bank Ltd. and (0.007) are less than 0.values (0.values of pair comparison of return on asset and return on equity in both cases of before and after privatization i.values (0.value and mean value in each case of pair comparison of return on asset.e.e.002) and pair ROE (0. In case of Habib bank ltd. it shows significant p.94*) and p. But there is found the negative mean value in case of pair NIM measure i. In case of Muslim commercial bank ltd. it shows significant increased in mean values (i.008) in pair of ROA. 1.003) in pair of ROE are less than 0.133* & 12.007) are less than 0. Whereas its p.
firstly I measure the Financial of four selected financiaal management system together based on sample selected sample years data in terms of above mentioned profitability and efficiency ratio. For conducting data analysis in my research study. 60 . I make two separate parts for data analysis. and NIM in both case of before and after privatization of bank through applying technique of paired sample t test. & ROE) and efficiency ratio i. Secondly. By doing separate data analysis of these financiaal management system.05 in each case of pair comparison of ROA. and NIM measure. Collectively. I have attached separate data analysis of individually financiaal management system in appendix of my research study. Whereas. and ABL) get improved after privatization comparatively to before privatization because its p-value is less than 0.observed significant changed or improvement in financial Financial of MCB in profitability ratios in case of post privatization period in paired sample t test. ROE. UBL. NIM which is clearly shown through its significant p-values in paired sample t test output.e. I would be able to disclose that which bank Financial get improved or remained same or become worse after the privatization with respect to before privatization. By observing these output of financiaal management system collectively I come to know that the Financial of these banks not only improved after the privatization but also able to sustain their Financial in terms of profitability ratios (ROA. ROE. it is proved that the Financial of selected financiaal management system (named as MCB. HBL. I evaluated the Financial of financiaal management system individually through analyzing these ratios ROA.
If Pakistani banks go incorrect to evolve their human asset as asserted by effectively checked new methodologies. The banking commerce is yet not equipped with the schemes essential to contend in a highly dynamic banking environment. foreign banks will organise to take foremost part of the market share. The heritage and attitudinal difficulties are the premier components that are initating major disagreement in changing the banks to be on the pathway to success. their survival as thriving economic organisations would stay just a dream. it can be securely resolved that Pakistani banking commerce is lagging far behind the foreign banks functioning in our close proximity. Sooner or subsequent. assisting the identical market. 61 . by proposing newer and better goods and services.CONCLUSION Based on the investigation of the banking commerce.
However. Organizations provide work diverse motivational and commitment profiting methods to double-check long-run connection and high grade of worker firm promise – FMS being the key device in this regard. and is in detail a dilemma opposite organizations. obtaining and keeping gifted workers is not an so straightforward task. the major topic is the evaluation process. 62 . it can be securely states that factual implementation of FINANCIAL Management can be accomplished if both presentation architecture and assessing device are characterised as asserted by the environment of commerce and the power of competition. if suitably evolved. The living FMS in Pakistani banking commerce is reflective of the detail that mindset of the workers is not suitable/ ripe for factual and impartial evaluation because peak administration has not ever taken it in the past and rank quo sustaining attitude/ heritage persists. some of the banks have organised to evolve the scheme encompassing appraisal pattern on new lines. Appropriate teaching of workers can guaranty the equitable evaluation. can supply the comparable for demonstration over the affray for long times to come. Although. It has farther been accepted by most of the companies that the gifted Human Resource.Having investigated the FMS being performed by the world premier associations and then matching it with the one being utilised by Pakistani banking commerce. The vintage workers find the scheme a risk to their places and accept as factual in vintage customary administration style. The key contributory component to blame for the thriving implementation of FMS is the firm promise and mind-set brandished by the supervisors in specific and subordinates in general. There is a authentic require for nearly all the banks to embark upon a normal teaching program to train the workers directed at advancing their evaluative abilities as well as change their mindset.
validity and reliability. there is a require to develop appraisal types founded on a hybrid of the demeanour.Instead of next solely MBO or ability founded set about. the scheme will have to be checked contrary to the criteria intended for assessing the strategic congruence. Finally. ability and outcome founded set about with apt balance that should minimize the component of subjectivity. EXISTING FINANCIAL MANAGEMENT SYSTEM IN THE DOMESTIC BANKING INDUSTRY (FINDINGS) Muslim Commercial Bank (MCB) Allied Bank Limited (ABL) United Bank Limited (UBL) Habib Bank Limited (HBL) 63 .
The RCO will initially scrutinize the report and will decide on the basis of all available information and additional enquiries whether or not the transaction remains suspicious or whether there is some additional information that removes the suspicion. have procedures in place for reporting suspicious transactions and circumstances. The Internal Suspicious Report Form will remain on file within the Bank and is not passed to FMU.2 below.II 65 .I Muslim Commercial Bank (MCB) The Bank must. There are four stages to the Bank’s suspicious transaction reporting procedure: • It is the duty of every member of management and staff to report any suspicious transactions or suspicions to the Regional Compliance Officer (RCO) with copy to Regional Head Compliance (RHC) and Head of Compliance Group using the reporting procedures set out in 8. Section . by Law. • • All Internal Suspicious Transaction Reports must reach RCO with copy to RHC and must not be blocked at Branch level. The name of the individual member of staff who made the report will not be revealed.Section . he will prepare a report in conjunction with the respective GM/RM or Area Head after making discreet enquiries for the RHC who will review the findings and accordingly discuss it with the Head of Compliance Group. Head of Compliance Group will advise concerned group head. Head of Compliance Group will discuss the matter with the President and accordingly advise Financial Monitoring Unit (FMU) at State Bank of Pakistan (SBP). • If the RCO considers the suspicion to be justified.
Section . • To play a proactive function in assisting in the direction of the society.Allied Bank Limited (ABL) ABL’s finding objective declaration embraces next salient points: • • • To supply value-added services to our customers. effectiveness and diversity for all stakeholders. To inspire and aid workers in advancing their presentation and accomplishing their personal/ expert vocation goals. • To supply a demanding work natural environment and pay dedicated group constituents as asserted by their natural forces and FINANCIAL. 66 .III United Bank Limited (UBL) The finding Objectives of the FINANCIAL Management Program are: • • To assess work FINANCIAL. To conceive sustainable worth through development. To supply high-tech innovative answers to rendezvous clients requirements.
To supply a solid route for vocation designing for each individual.• • To recognize workers with high promise for advancement. advertisements. To supply target data for producing conclusions on wages rises.IV Habib Bank Limited (HBL) The finding Objectives of the financial Management system are: • To inspire and aid workers in advancing their presentation and accomplishing their personal/ expert vocation goals. bonus and transfers. To supply target data for producing conclusions on wages rises. Section . • • To recognize workers with high promise for advancement. • • To recognize workers teaching and developmental needs. bonus and transfers 67 . advertisements.
periodic evaluations undertook in agreement with normalized methods focusing on job associated facets of the employee’s FINANCIAL. This is best carried out when presentation measures and objectives are mutually appreciated and acquiesced upon and when presentation objectives are sensibly aligned with centre 68 . To complete this aim. a prescribed presentation appraisal program should be applied encompassing schemes that need normal.RECOMMENDATIONS The prime aim of an appraisal scheme is to make an unquestionable. target and equitable image of an employee’s presentation and then to notice the localities needing improvement.
Approaches to FINANCIAL Management (By Michael Pearn. William. Mc Graw Hill. 2001. as clarified in the ensuing paragraphs: BIBLIOGRAPHY Text Books: 1. John Wiley & Sons. there is an pressing require to first change the living non-adaptive/ steady heritage through reliable teaching meetings and then to recognize the significance of an productive FMS. Noe. Based on the study conveyed out in the previous components of the thesis. Raymond A. Besides. Delhi) 3. In alignment to convey the firm promise grade of Human Resource of Pakistani banking commerce to a grade where they are adept to rendezvous the trials of very fast close to foreign affray. Jaico Publishing House. a comprehensive but a balanced FMS desires to be instituted in the general HR function of the commerce to pay the good performers and differentiate them from the dead wood. Human Resource Management – Gaining a Competitive Advantage (Third Edition. for Pakistani banking commerce. Efficient Offset Printers.2000) 2. Swan. FINANCIAL Management – the new realities (By Michael Armstrong & Angela Baron.competencies and standards identified as being most paying and beneficial to the company’s general objective and future enterprise direction. Inc 1991. 2002) 4. particularly with the implementation of WTO. a new FMS form has been suggested encompassing an appraisal pattern. 69 . S “How to do a superior FINANCIAL appraisal”.
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FINANCIAL-appraisal. Web site. “www. “http://virtual.hbl.cc. 4.yosemite.ubl.com”.com”. 6. 3. “http://www.ca. 71 .hrpowerhouse. Web site. Web site. “www.htm”.pk.com”. “www.1.pk. Web site. 2.mcb.htm”.com”.us/smithaj/research_model %20thesis.abl.pk.asp. http://www. Web site.com/freetrial/freetrial.pk. “www. 5. 7. Web site.com/personnel_FINANCIAL_appraisal/overview. Web site.