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Management of Financial Institutions

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Management of Financial Institutions - MGT 604
VU
Lecture # 13
PAKISTAN ECONOMIC AID & DEBT
The Asian Development Bank will provide close to $ 6 billion development assistance to
Pakistan during 2006-9. The World Bank unveiled a lending program of up to $6.5 billion
for Pakistan under a new four-year, 2006-2009, aid strategy showing a significant increase
in funding aimed largely at beefing up the country's infrastructure. Japan will provide $500
million annual economic aid to Pakistan.
The major causes of poverty in Pakistan
1. Lack of employment opportunities, which in the rural setting is caused by the absence of
rural-urban linkages.
2. A slowdown in the pace of economic growth in the 1990s
3. With the burgeoning debt obligations, a decline in the public sector development
program.
Key challenges facing the Government of Pakistan
1. Restoring economic growth-constrained further by a drought-affected agriculture sector
2. Managing the large debt burden with international financial institutions.
3. Promoting domestic and foreign investors' confidence
4. Increasing exports to generate foreign exchange,
5. Maintaining a level of social development spending to stem the deteriorating social
indicators.
6. Law and Order, or Terrorism
Future Prospects for Pakistan's Economy
Pakistan's long term prospects will depend upon the interplay of evolution in political and
social developments, economic policies to be pursued, the quality of governance and
institutions, and most important investment in the human capital. It has become quite
obvious from both Pakistan's own history and the experience of the developing countries
that sustained economic growth and poverty reduction cannot take place merely on the
strength of economic policies. Political stability, social cohesion, supporting institutions,
and good governance are equally important ingredients coupled with both external
environments for achieving economic success.
Macroeconomic Stability
Pakistan must strive to maintain its present level of macroeconomic stability. The most
important thing needed is the will power of the ruling elite and the continuity of structural
reforms undertaken by the military government. The country is now on the path to
macroeconomic stability and is less vulnerable to external shocks than it was a decade ago.
There has been improvement in all of the major macroeconomic indicators. The growth rate
of the economy, which was under 4 percent during the 1990s, has shown considerable
improvement.
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Management of Financial Institutions - MGT 604
VU
Strengthening Institutions
Recent empirical evidence suggests that sound economic policies cannot make any
difference in the lives of the common citizens if the country does not have strong
institutions to implement such policies. Pakistan inherited a strong civil service, judiciary,
and police, which satisfied the demands of millions of people. But as its population
expanded, the nature of governance became more complex and the capacity of these
institutions did not keep pace with the emerging demands of the economy. These
institutions were weakened by a succession of non-professional peoples. Finally, there is a
need to improve the institutions of inter-provincial harmony to help in eradicating inter-
provincial competition and jealousy. The Council of Common Interest, National Economic
Council, and National Finance Commission are three institutions that are concerned with the
distribution of the resources among the provinces. If these institutions were strengthened,
policies that favor one province over another would not be adopted, which has been quite
common in the past.
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Table of Contents:
  1. Financial Environment & Role of Financial Institutions:FINANCIAL MARKETS &INSTITUTIONS
  2. FINANCIAL INSTITUTIONS:Non Banking Financial Companies
  3. CENTRAL BANK:Activities and responsibilities, Interest Rate Interventions
  4. POLICY INSTRUMENTS:Open Market Operations, Capital Requirements
  5. BALANCE OF TRADE:Balance of Payments Equilibrium, Public Policy and Financial Stability
  6. STATE BANK OF PAKISTAN:History, Regulation of Liquidity, Departments
  7. STATE BANK OF PAKISTAN - VARIOUS DEPARTMENTS:Banking Inspection Department
  8. STATE BANK OF PAKISTAN - VARIOUS DEPARTMENTS (Contd.):Debt Management
  9. STATE BANK OF PAKISTAN - VARIOUS DEPARTMENTS (Contd.):Training Programs by SBP
  10. STATE BANK OF PAKISTAN - VARIOUS DEPARTMENTS (Contd.):Human Resources Department
  11. MAJOR DRIVERS OF FINANCIAL INDUSTRY:GLOBAL FINANCIAL SYSTEM, The World Bank
  12. INTERNATIONAL FINANCIAL INSTITUTIONS:ADB Projects in Pakistan, Paris Club
  13. PAKISTAN ECONOMIC AID & DEBT:Macroeconomic Stability, Strengthening Institutions
  14. INCREASING FOREIGN DIRECT INVESTMENT:Industrial Sector, Managing the Debt
  15. ROLE OF COMMERCIAL BANKS:Services Typically Offered by Banks, Types of banks
  16. ROLE OF COMMERCIAL BANKS:Types of investment banks, The Management of the Banks
  17. ROLE OF COMMERCIAL BANKS:Public perceptions of banks, Capital adequacy, Liquidity
  18. ROLE OF COMMERCIAL BANKS:Problem bank management, BANKING SECTOR REFORMS
  19. ROLE OF COMMERCIAL BANKING:Private Deposit Insurance,
  20. BRANCH BANKING IN PAKISTAN:Remittances, Online Fund Transfer
  21. ROLE OF COMMERCIAL BANKS IN MICRO FINANCE SECTOR
  22. Mutual funds:Types of international mutual funds, Mutual funds vs. other investments
  23. Mutual Funds:Criticism of managed mutual funds, Money Market Fund
  24. Mutual Funds:Balanced Funds, Growth Funds, Specialized Funds, Measuring Risks
  25. Mutual Funds:Cost of Ownership, Redemption Fee, Reports to Shareholders
  26. Mutual Funds:Internet Fraud, The Pyramid Scheme, How to Avoid Investment Fraud
  27. Mutual Funds:Investing In International Mutual Funds, How to Pre-Select a Mutual Fund
  28. Role of Investment Banks:Recent evolution of the business, Possible conflicts of interest
  29. Letter of Credit:Elements of a Letter of Credit, Commercial Invoice, Tips for Exporters
  30. Letter of Credit and International Trade:Terminology, Risks in International Trade
  31. Foreign Exchange & Financial Institutions:Investment management firms, Exchange Traded Fund
  32. Foreign Exchange:Factors affecting currency trading, Economic conditions include
  33. Leasing Companies:Basic Purpose of Leasing, Technological Benefits
  34. The Leasing Sector in Pakistan and its Role in Capital Investment
  35. Role of Insurance Companies:Indemnification, Insurer’s business model
  36. Role of Insurance Companies:Life insurance and saving
  37. Role of financial Institutions in Agriculture Sector:What is “Revolving Credit Scheme”?
  38. Agriculture Sector and Financial Institutions of Pakistan:What is SMEs
  39. Can Government of Pakistan Lay a Pivotal Role in this Sector?:Business Environment
  40. Financial Crimes:Process of Money Laundering, Terrorist Financing
  41. DFIs & Risk Management:Managing Credit Risk, Managing Operational Risk
  42. Banking Fraud & Misleading Activities:Rogue Traders, Uninsured Deposits
  43. The Collapse of ENRON:Auditing Issues, Corporate Governance Issues, Corrective Actions
  44. Classic Financial Scandals:Corruption, Discovery, Black Wednesday
  45. RECAP:FINANCIAL INSTITUTIONS, CENTRAL BANK,