In a globalized world in which the structures of the financial service industries are changing rapidly and becoming more and more competitive, the cost efficiency of financial institutions along with better quality of service have assumed crucial significance for their long-term sustainability. Hence, the nature of efficiency of financial institutions will determine the prospects of their success in meeting the challenges of a globalized world. The commercial banks in Pakistan are also facing the challenges of increased competition from foreign commercial banks while their operations over the years have also been called into question. However, the literature, which deals with questions of cost efficiency of commercial banks in Pakistan in a professional manner is scant. The information on relative technical efficiency of commercial banks, if available, can be helpful in designing policy for this important sector.
KEYWORDS: Financial institutions, Pakistan, commercial banks, sustainability, banking sector.
JEL: N/A.

The purpose of this study is to test the efficiency of the Turkish Markets in terms of the monthly inflation announcement effect. The study examines the reaction of the financial services sector to monthly inflation announcements, particularly, in case of unexpectedly low or high levels of inflation. Strong evidence emerges that the Turkish financial services sector does not react significantly to the announcements that are in line with the expectations. In other words, the cumulative abnormal returns around such inflation announcements are not significantly different from 0. The results of the robustness tests for no news, indicate that the t-statistics calculated by means of the Moving Average Approach are insignificant for the sector, which is in line with the results of the original approach. The results of the two robustness tests are found to be supporting the original findings of the adaptive approach.
KEYWORDS: Abnormal Returns (ARs), Cumulative Abnormal Returns (CARs), effects of macroeconomic announcements.
JEL: N/A.

In this paper we investigate both the long and short-run relationship between real money balances, real income, inflation rate, foreign interest rate and real effective exchange rate with reference to Pakistan over the period 1982Q2-2002Q4 using ARDL approach which is a newly developed econometric technique. The estimated results indicate that in the long-run real income, inflation rate, foreign interest rate and real effective exchange rate have a significant impact on real money balances in Pakistan. The dynamics of real money demand show that the effects of rate of inflation, foreign interest rate and the real effective exchange rate are much smaller in the short run than long run. The results also reveal that the demand for real money balances in Pakistan is stable, despite the economic reforms pursued by the government since the late 1980s.
KEYWORDS: Pakistan, ARDL, exchange rates, monetary policy.
JEL: N/A.

This study was conducted to analyze the comparative advantage and competitiveness of wheat crop and its implications for resource allocation towards competing crops. The extent of policy distortion and agricultural protection was also determined by the study. The data were collected from APCom on cost of production of wheat crop over the three year period (2001-2003). Two main provinces contributing towards wheat production i.e. Punjab and Sindh were selected as the sample. This data were then averaged to obtain a national scenario. The crop budgets were prepared initially in financial terms and later on economic prices were utilized to evaluate the comparative advantage and competitiveness of the wheat crop. The Policy Analysis Matrix (PAM) was selected as the analytical framework. The policy distortions were measured through Nominal Protection Coefficient (NPC) and Effective Protection Coefficient (EPC). The Domestic Resource Cost ratio (DRC) was selected as a measuring tool for comparative advantage. Keeping in view the importance of wheat in the economy, the analysis was conducted in two price regimes i.e. import and export parity prices. The analysis results showed that at import parity price Pakistan has a comparative advantage in the production of wheat only as an import substitution crop. At export parity price, Pakistan is not competitive in the world wheat market and has no comparative advantage in wheat production.
KEYWORDS: PAM, Pakistan, NPC, DRC, EPC, wheat crop.
JEL: N/A.

In September 1997, the World Bank formally began its anti-corruption initiatives by adopting a series of official guidelines and policy statements to aid in anti-corruption strategies. One of the main areas of focus is international trade. According to World Bank (1997), the areas in which corruption is most often found is in, “customs and tax departments, social security agencies, land titling and environment agencies administering regulations and issuing licenses, public works departments and other agencies involved in significant public procurement, police and judiciary, and privatization agencies.” In particular, trade policies can be susceptible to corruption, even though many countries have successfully managed trade policies to promote industrialization. This susceptibility of trade policies to corruption is because they involve allocations made by the authorities on discretionary rather than efficiency bases. Examples of this are the discretionary actions of customs officials, the administrative actions of the authorities in the allocation of import licenses and foreign exchange, and bribery involved in maintaining high rates of tariffs.
KEYWORDS: World Bank, anti-corruption strategies, international trade.
JEL: N/A.

Pakistan was one of the few developing countries that had achieved an average growth rate of over 5 percent over a four decade period ending in 1990. Consequently, the incidence of poverty had declined from 40 percent to 18 percent by the end of 1980s. But the 1990s proved to be a lost decade for Pakistan; growth in per capita income dropped to slightly over 1 percent. Poverty resurfaced and about one-third of the population now lives below the poverty line of $1 per day. Social indicators became worse than those of other countries with comparable incomes. The country became one of the heavily indebted countries and was declared as one of the most corrupt countries in 1996. The challenge facing the government which assumed power in October 1999 was to put the economy back to its pre-1990 track.
KEYWORDS: Pakistan, economy, developing countries, growth rate.
JEL: N/A.

Despite impressive macroeconomic indicators, Pakistan’s economy has not shown the kind of investment and employment generation performance which is required to move the country on to a growth trajectory which will mean significant reduction in poverty levels and substantial improvement in its social indicators.
KEYWORDS: Pakistan, private investment, economic growth, macroeconomic indicators.
JEL: N/A.

It is remarkable that from a situation of default and unsustainable fiscal and balance of payments deficit only a few years back, Pakistan has come out of the debt trap, balance of payments turned surplus1, and fiscal deficit has declined below 4 percent of GDP. However, sharp increase in the inflation rate, widening trade deficit and re-emergence of balance of payments deficit in the current year are quite worrisome. With the widening of the balance of payments deficit and the possibility that fiscal deficit may start rising as the government provides for the higher levels of public expenditure, would the debt problem not emerge once again? Bilquees (2003) has examined the growth of debt over the 1980-81 to 2002-03 period by de-composing the effect of primary deficit, interest rates and exchange rate adjustments. She argues that primary deficits are basic to the growth of debt. Higher government public expenditure compared to its resources leads to higher domestic as well as external borrowings. The external borrowing with limited repayment capacity results in exchange rate depreciation with consequent implications for the debt. The differential between interest rates and growth of GDP also have implications for the debt but in Pakistan it did not result in rising debt ratio because the interest rates have always remained lower than the growth rate.
KEYWORDS: GDP, debt, debt trap, payment, surplus.
JEL: N/A.

“Pakistan’s investment in its people today not only falls below any decent concept of national governance; we are simply not preparing the nation for technological challenges of the 21st century. Where do we start in such a wasteland of human neglect? The situation cannot be reversed overnight. It would require considerable investment in human development over a fairly long period of time.” Dr. Mahbubul Haq: A National Agenda: Critical Choices for Pakistan's Future: 1993 According to the traditional view in the development debate of the 1960s, land, labor and capital were identified as the main factors of production and within these the focus was on expanding capital by increasing investment to at least 15 percent of GDP to achieve a growth rate of at least 5 percent.
KEYWORDS: Pakistan, development, education.
JEL: N/A.

The experience of the State Bank of Pakistan (SBP) in conducting the monetary policy of the country over the years comprises a whole range of regimes. While the overall objectives of monetary policy have remained the same, policy contents – intermediate targets, choice of instruments and controls etc. – have varied considerably over the years.
KEYWORDS: Pakistan, SBP, inflation, economic growth, monetary policy.
JEL: N/A.