Program: BBA Class & Section: Summer (Financial Management)

Course Name: FINANCIAL MANAGEMENT Group Members:- Mustafa Abbasi (1911188)

Ahmed Abbasi (1911234)
Instructor’s Name: DR SHUMAILA ZEB HANDOUT

The Poor State of Financial

Markets in Pakistan

Published By:-

Shahid Mehmood and Ahmad Fraz

Year of Publishing:- 2020

Main Theme:-

One of the major issues, information asymmetry between buyers and sellers, is partly resolved through
well-functioning financial markets. Larger and deeper financial markets result in provision of more
liquidity to market participants, while smaller markets tend to be short on liquidity. In order to assess
how financial markets have performed in Pakistan over time, an analysis of its various components
needs to be made.

Summary:- This case study gives us an insight into the deep underlying issues of the Pakistani financial
Market. Starting with the first component which is negatively contributing towards a poor market are
stocks. Stock market remains significantly under- developed in Pakistan despite 70 years of efforts and
technical assistance from various aid agencies. Although stock market’s returns in Pakistan have been
higher than other asset classes, not even a percent of Pakistan’s population invests in the stock market.

It gives us a clear view on why the stock markets are failing. Moreover, it also gives a brief
understanding of how two major components of the financial market which would be the banks and
insurance companies , are playing it safe by relying heavily on the public sector where risk is
comparatively lower. The case study provides backing for how underperforming regulatory bodies of the
country also contribute to the poor financial market.